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Fortune Brands (FBHS) to Post Q3 Earnings: Beat in Store?

Fortune Brands Home & Security, Inc. FBHS is scheduled to report third-quarter 2020 results on Oct 28, after market close.

The company delivered better-than-expected results thrice in the last four quarters, while missing estimates once. Earnings surprise for the last four quarters was a positive 19.44%, on average.  In the last reported quarter, it posted earnings of 94 cents per share, which beat the Zacks Consensus Estimate of 59 cents by 59.32%.

In the past three months, the company has gained 15% compared with the industry’s growth of 9.2%.

Factors at Play

Solid demand for decking products, along with solid momentum in its doors and security businesses, supported by incremental investments for product line expansion, is expected to have boosted third-quarter revenues of the Doors & Security segment. Also, strength across its plumbing business, backed by growing popularity of brands and the success of its category and channel expansion strategies, is anticipated to have supported the company’s Plumbing segment’s revenues. In addition, growing popularity of its value price point cabinetry products might have supported the Cabinets segment.

Further, strength across the company’s Fiberon business, which has been enhancing growth opportunities in the outdoor living space, is likely to have supported third-quarter revenues. In addition, its distribution partnership with OrePac (inked in July 2019) is anticipated to have proven beneficial for its top line during the quarter.

Moreover, its focus on supply-chain and manufacturing footprint-optimization initiatives, along with cost-control actions like the reduction of operating expenses and non-essential capital expenditure, might have helped it maintain a healthy margin performance in the to-be-reported quarter.

However, market downturn caused by the coronavirus outbreak-led issues is expected to have had an adverse impact on its top-line performance. Also, supply chain challenges might have had a bearing on the company’s performance.

The Zacks Consensus Estimate for the Plumbing segment's revenues is pegged at $536 million, reflecting growth of 6.1% from the quarter-ago reported number. The consensus estimate for Cabinets segment’s revenues stands at $593 million, implying an increase of 10% from the reported figure in the previous quarter. The consensus mark for Doors & Security segment’s revenues stands at $358 million, implying a 7.8% sequential increase.

Earnings Whispers

Our proven model suggests an earnings beat for Fortune Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of +2.97% as the Most Accurate Estimate is pegged at $1.09, higher than the Zacks Consensus Estimate of $1.06.

Fortune Brands Home Security, Inc. Price and EPS Surprise

Fortune Brands Home  Security, Inc. Price and EPS Surprise

Fortune Brands Home Security, Inc. price-eps-surprise | Fortune Brands Home Security, Inc. Quote

Zacks Rank: Fortune Brands carries a Zacks Rank #2.

Other Key Picks

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Flowserve Corporation FLS has an Earnings ESP of +2.56% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEX Corporation IEX has an Earnings ESP of +7.80% and a Zacks Rank #2.

Johnson Controls International plc JCI has an Earnings ESP of +2.69% and a Zacks Rank of 3, at present.

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Johnson Controls International plc (JCI): Free Stock Analysis Report
 
Flowserve Corporation (FLS): Free Stock Analysis Report
 
Fortune Brands Home Security, Inc. (FBHS): Free Stock Analysis Report
 
IDEX Corporation (IEX): 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.

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