Fortune Brands was originally part of a holding company founded in 1969 and known as American Brands. The American Brands company had a significant diversity of products but in December 2010 it announced that the company planned to focus solely on its liquor business and spin off or sell the other parts of the company – including home furnishings and hardware and the golf products. The company sold the Titleist and FootJoy product lines to FILA Korea. On October 3, 2011, American Brands split the remainder of its business into two publicly traded companies: Fortune Brands Home & Security and Beam Inc. This article focuses on Fortune Brands Home and Security Inc.
Fortune Brands Home & Security, Inc. provides home and security products for use in residential home repair, remodeling, new construction, and security applications. It operates in four segments: Cabinets, Plumbing, Doors, and Security. The Cabinets segment manufactures custom, semi-custom, and stock cabinetry, as well as vanities for the kitchen, bath, and other parts of the home under various brand names, including Aristokraft, Diamond, Kitchen Craft, Mid-Continent, Kitchen Classics, Schrock, Omega, Thomasville, Homecrest, Ultracraft, and StarMark. The Plumbing segment manufactures or assembles, and sells faucets, accessories, kitchen sinks, and waste disposals under the Moen and Waste King brand names in North America, China, Mexico, Southeast Asia, and South America. The Doors segment manufactures and sells fiberglass and steel residential entry door and patio door systems under the Therma-Tru brand name; and urethane millwork products under the Fypon brand name in the United States and Canada. The Security segment offers key-controlled and combination padlocks, bicycle and cable locks, built-in locker locks, door hardware, automotive, trailer and towing locks, electronic access control solutions, and other specialty safety and security devices under the Master Lock brand name; and fire resistant safes, security containers, and commercial cabinets in the United States, Canada, Europe, Central America, and Australia. The company sells its products through kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, do-it-yourself remodeling-oriented home centers, and other retail outlets. Fortune Brands Home & Security, Inc. was founded in 1988 and is headquartered in Deerfield, Illinois.
(Summary) (Company) (Chart)
| 18 December 2016 Price $55.26 1yr Target $65.08 Analysts 12 Dividend $0.72 Payout Ratio 28.91% 1yr Cap Gain 17.77% Yield 1.30% 1yr Tot Return 19.07% P/E 22.17 PEG 1.63 Beta 1.29 | EPS (ttm) $2.49 EPS next yr $3.12 Forward P/E 17.72 EPS next 5yr 13.60% 1yr Price Support $42.43 Market Cap $8.54 Bil Revenues $4.91 Bil Earnings $395.50 Mil Profit Margin 8.04% Quick Ratio 1.30 Current Ratio 2.00 Debt/Equity 0.67 | 1yr RevGR 14.10% 3yr RevGR 13.39% 5yr RevGR --- 1yr EarnGR 103.15% 3yr EarnGR 39.09% 5yr EarnGR --- 1yr DivGR 16.66% 3yr DivGR 14.31% 4yr DivGR 15.82% ROA 7.80% ROE 17.20% |
Fortune Brands Home & Security (FBHS) declares an $0.18/share quarterly dividend, a 12.5% increase from its prior dividend of $0.16. The forward yield is now 1.3% and payable on March 15 for shareholders of record Feb. 24. Ex-dividend date is Feb. 22.
Fortune Brands is a leading home and security products company that competes in attractive long-term growth markets in several product categories. With a foundation of market-leading brands across a diversified mix of channels, and lean and flexible supply chains, as well as a tradition of strong product innovation and customer service, the company is focused on outperforming the competition in both growth and returns, and driving increased shareholder value. Products are sold through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself” remodeling-oriented home centers and other retail outlets. The company believes that the company’s impressive track record reflects the long-term attractiveness and potential of their categories and their leading brands. The company's performance since becoming an independent publicly traded company in 2011 demonstrates the strength of their operating model and their ability to generate profitable growth as sales volume increases and they leverage their structural competitive advantages to gain market share.
The company's products compete on the basis of innovation, fashion, quality, price, service and responsiveness to distributor, retailer and installer needs, as well as end-user consumer preferences. Approximately 15% of 2015 net sales were to international markets, and sales to two of the Company’s customers, The Home Depot, Inc. and Lowe’s Companies, Inc., each accounted for more than 10% of the Company’s net sales in 2015. Sales to all U.S. home centers in the aggregate were approximately 30% of net sales in 2015.
Cabinets. The Cabinets segment manufactures custom, semi-custom and stock cabinetry, as well as vanities, for the kitchen, bath and other parts of the home through a regional supply chain footprint to deliver high quality and service to their customers. This segment sells a portfolio of brands that enables customers to differentiate themselves against competitors. This portfolio includes brand names such as Aristokraft, Diamond, Kitchen Craft, Mid-Continent, Kitchen Classics, Schrock, Omega, Thomasville, Homecrest, Ultracraft and StarMark. Substantially all of this segment’s sales are in North America. This segment sells directly to kitchen and bath dealers, home centers, wholesalers and large builders. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 35% of net sales of the Cabinets segment in 2015. This segment’s competitors include Masco, American Woodmark and RSI, as well as a large number of regional and local suppliers.
Plumbing. The Plumbing segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals in North America and China, predominantly under the Moen and Waste King brands. Although this segment sells products principally in the U.S., Canada and China, this segment also sells in Mexico, Southeast Asia and South America. Approximately 23% of 2015 net sales were to international markets. This segment sells directly through its own sales force and indirectly through independent manufacturers’ representatives, primarily to wholesalers, home centers, mass merchandisers and industrial distributors. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 26% of net sales of the Plumbing segment in 2015. This segment’s chief competitors include Delta (owned by Masco), Kohler, Pfister (owned by Spectrum Brands), American Standard (owned by LIXIL Group), InSinkErator (owned by Emerson Electronic Company) and imported private-label brands.
Doors. The Doors segment manufactures and sells fiberglass and steel entry door systems under the Therma-Tru brand and urethane millwork product lines under the Fypon brand. This segment benefits from the long-term trend away from traditional materials, such as wood, steel and aluminum, toward more energy-efficient and durable synthetic materials. Therma-Tru products include fiberglass and steel residential entry door and patio door systems, primarily for sale in the U.S. and Canada. This segment’s principal customers are home centers, millwork building products and wholesale distributors, and specialty dealers that provide products to the residential new construction market, as well as to the remodeling and renovation markets. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 11% of net sales of the Doors segment in 2015. This segment’s competitors include Masonite, JELD-WEN, Plastpro and Pella.
Security. The Security segment’s products consist of locks, safety and security devices, and electronic security products manufactured, sourced and distributed under the Master Lock brand and fire resistant safes, security containers and commercial cabinets manufactured, sourced and distributed under the SentrySafe brand. This segment sells products principally in the U.S., Canada, Europe, Central America and Australia. Approximately 25% of 2015 net sales were to international markets. This segment manufactures and sells key-controlled and combination padlocks, bicycle and cable locks, built-in locker locks, door hardware, automotive, trailer and towing locks, electronic access control solutions, and other specialty safety and security devices for consumer use to hardware, home center and other retail outlets. In addition, the segment sells lock systems to locksmiths, industrial and institutional users, and original equipment manufacturers. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 17% of the net sales of the Security segment in 2015. Master Lock competes with Abus, W.H. Brady, Hampton, Kwikset (owned by Spectrum Brands), Schlage (owned by Allegion), Assa Abloy and various imports, and SentrySafe competes with First Alert, Magnum, Fortress, Stack-On and Fire King.
 FBHS Dividend History |  End of Year Stock Price |
My Perspective
Eventually every home needs to be remodeled or upgraded and Frotune Brands is the company benefiting the most from this activity. As they continue to improve and expand their product lines their fundamental continue to improve. They make the quality products that everyone wants so it's the kind of company I'm always looking for. It's also a company that makes many of the products that I find in my own home so I'm familiar with their quality products.
This is a company I plan to add to my portfolio very soon. In fact I'm amazed it's not already in there, As with all investments, I'll start with a small position and then add to that position though dividend reinvestment, the sale of call options, and open market purchases as opportunities present themselves.
Buying shares of this company really seems to be an obvious and easy decision. I expect to hold this position for a very long time.
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