NEW YORK (TheStreet) -- Fortune Brands Home & Security (FBHS) has been upgraded to "outperform" from "neutral" with a $50 price target, Credit Suisse said Wednesday. The firm said the downturn is just a pause in the cycle and that the company has attractive long-term growth and cash flow potential.
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Separately, TheStreet Ratings team rates FORTUNE BRANDS HOME & SECUR as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FORTUNE BRANDS HOME & SECUR (FBHS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 16.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FORTUNE BRANDS HOME & SECUR 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 HOME & SECUR increased its bottom line by earning $1.33 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.33).
- 36.06% is the gross profit margin for FORTUNE BRANDS HOME & SECUR which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.82% is above that of the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- FBHS's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: FBHS Ratings Report