FBHS - Embedded Expectations Analysis - 2020 05 01
Fortune Brands Home & Security, Inc. (FBHS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 16.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm. Moreover, management may be concerned about growth, the housing and construction market, and operating marginsSpecifically, management may be overstating Global Plumbing Group's ability to remain an industry leader and the sustainability of U.S. new construction and housing market growth. In addition, they may lack confidence in their ability to build brand awareness among millennial-aged adults, sustain Cabinet store sales growth, and pursue the most profitable growth opportunities. Furthermore, management may have concerns about their Moen China operations and a slow housing market in Canada and Mexico. Moreover, they may lack confidence in their ability to improve their EPS, sustain growth in China and in their decking and security businesses, and maintain their operating income, operating margins, and free cash flow. Additionally, management may be concerned about the sustainability of growth across their product markets, their capacity realignment, and potential increases in M&A activity. Finally, they may lack confidence in their ability to cut costs and expand and optimize their Mexican manufacturing footprint, and they may be overstating Door construction tailwinds for 2020
Fortune Brands Home & Security is a holding company. Through its subsidiaries, the company provides home and security products. The company's segments are: Cabinets, which manufactures cabinetry and vanities, for the kitchen, bath and other parts of the home; Plumbing, which manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals; and Doors and Security, which manufactures and sells fiberglass and steel entry door systems, composite decking and railing, and urethane millwork, as well as manufactures, sources and distributes locks, safety and security devices, and electronic security products and fire resistant safes, security containers and commercial cabinets.
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