As Fortune Brands Home & Security, Inc. (NYSE:FBHS) announced its earnings release on 31 December 2018, analysts seem fairly confident, with profits predicted to increase by 31% next year compared with the past 5-year average growth rate of 16%. Currently with trailing-twelve-month earnings of US$390m, we can expect this to reach US$512m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Fortune Brands Home & Security in the longer term?
The longer term expectations from the 17 analysts of FBHS is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 9.9% based on the most recent earnings level of US$390m to the final forecast of US$585m by 2022. EPS reaches $4.25 in the final year of forecast compared to the current $2.7 EPS today. In 2022, FBHS’s profit margin will have expanded from 7.1% to 9.2%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Fortune Brands Home & Security, there are three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Fortune Brands Home & Security worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Fortune Brands Home & Security is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Fortune Brands Home & Security? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.