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Fortune Brands (FBHS): What to Expect in Q3 Earnings?

Fortune Brands Home & Security, Inc.FBHS is slated to report third-quarter 2015 results on Oct 21, after the closing bell. In the last quarter, the company had delivered a positive earnings surprise of 1.7%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

With constant focus on product portfolio and future growth opportunities, Fortune Brands has been making investments in designing, planning and implementing additional capacity. While these efforts are expected to facilitate substantial growth, they are likely to take time owing to the soft consumer discretionary spending environment. Also, in the trailing four quarters, the company delivered an average negative earnings surprise of 6.8%, which makes us cautious of its performance in the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Fortune Brands is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Fortune Brands has an Earnings ESP of -1.54%. This is because the Most Accurate estimate stands at 64 cents, while the Zacks Consensus Estimate is pegged at 65 cents.

Zacks Rank: Fortune Brands' Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements:

Cabela's Incorporated CAB has an Earnings ESP of +1.37% and a Zacks Rank #3 (Hold).

Dollar Tree Inc. DLTR has an Earnings ESP of +1.82% and a Zacks Rank #3.

Amazon.com, Inc. AMZN has an Earnings ESP of +354.55% and a Zacks Rank #3.

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FORTUNE BRD H&S (FBHS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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