NEW YORK (
-- Fortune Brands
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- 45.90% is the gross profit margin for FORTUNE BRANDS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.00% is above that of the industry average.
- FO's revenue growth trails the industry average of 27.2%. Since the same quarter one year prior, revenues slightly increased by 3.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 642.6% when compared to the same quarter one year prior, rising from $11.50 million to $85.40 million.
- FORTUNE BRANDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FORTUNE BRANDS INC increased its bottom line by earning $3.16 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $3.16).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
Fortune Brands, Inc., through its subsidiaries, manufactures and sells branded consumer products in the distilled spirits, home and security, and golf markets primarily in the United States, Europe, Mexico, Canada, Australia, and Asia. The company has a P/E ratio of 20.2, equal to the average consumer durables industry P/E ratio and above the S&P 500 P/E ratio of 16.7. Fortune has a market cap of $9.8 billion and is part of the
industry. Shares are up 3.8% year to date as of the close of trading on Monday.
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