Fortune Brands' Q4 Earnings Preview: What Could Drive the Results?

Fortune Brands Innovations, Inc. FBIN is scheduled to report results for the fourth quarter of 2024 on Feb. 6, after market close.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate but sales missed the same. On a year-over-year basis, earnings and sales decreased 3% and 8% from the year-ago level, respectively.FBIN’s earnings surpassed expectations in each of the trailing four quarters, delivering an average surprise of 3.95%.How Are Estimates Placed for Fortune Brands Stock?The Zacks Consensus Estimate for Fortune Brands’ earnings per share (EPS) has increased to $1.05 from $1.04 over the past seven days. The estimated figure indicates an increase of 10.5% from the year-ago level.The consensus estimate for total revenues is pegged at $1.15 billion, indicating a 1.4% decrease from the year-earlier level.Factors That May Influence Fortune Brands’ Quarterly ResultsFortune Brands’ top line is expected to have declined year over year due to the ongoing residential market softness due to elevated mortgage rates and other macroeconomic challenges. Demand for home improvement products remained soft, with consumer spending constrained by high interest rates and inflation. However, FBIN’s core brands, such as Moen and Therma-Tru, continued to see relative strength.Although China now represents a smaller portion of FBIN’s total earnings, its prolonged real estate downturn remains a significant risk. The company has reduced its exposure to China, but recovery prospects remain uncertain. This is likely to have reflected in the top-line performance in the to-be-reported quarter.Price competition from low-quality alternatives is an added headwind. FBIN noted an influx of cheaper, non-compliant competitors in categories like security safes and water products. The company is responding with targeted marketing efforts to highlight the quality and reliability of its brands. However, this is likely to have affected the company’s quarterly performance to some extent as well.Nonetheless, its focus on high-margin, digitally enabled products and strategic cost management should position it well to offset the topline-related weakness. FBIN’s pivot to higher-margin, digitally enabled products continued to show promise. Its Flo Smart Water Monitor and Shutoff saw strong traction in the third quarter and is expected to show the same in the fourth quarter as well. Additionally, its luxury brands under House of Rohl, including Emtek, Yale, and August, are well integrated into its portfolio. While natural disasters negatively impacted third-quarter sales in affected regions, reconstruction activities could also drive demand for doors, plumbing, and home security products.Segment-wise, the Zacks Consensus Estimate for the company’s Outdoor segment sales (accounted for 29.6% of third-quarter sales) is currently pegged at $307 million, indicating a slight decline from $309 million a year ago. The consensus mark for Security segment sales (accounted for 15.4% of third-quarter sales) is currently pegged at $173 million, depicting a decline from $189 million a year ago. The consensus mark for Water segment sales (accounted for 55% of third-quarter sales) is currently pegged at $661 million, depicting a minor decline from $663 million a year ago.Despite ongoing revenue challenges, the company's emphasis on high-margin digital and smart home items, notably the Flo Smart Water Monitor, which experienced an 80% increase in point-of-sale transactions in the third quarter, might counterbalance the difficulties.What Our Model Unveils for Fortune BrandsOur proven model predicts an earnings beat for Fortune Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.Earnings ESP: FBIN has an Earnings ESP of +2.10%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently carries a Zacks Rank of 2.Other Stocks Poised to Beat on EarningsHere are a few other stocks from the Zacks Retail-Wholesale sector, which according to our model, have the right combination of elements to post an earnings beat this reporting cycle.Floor & Decor FND has an Earnings ESP of +4.39% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.FND is expected to register a 23.5% decrease in earnings for the to-be-reported quarter. It reported earnings beat in all the trailing four quarters, with an average surprise of 12.2%.Home Depot HD currently has an Earnings ESP of +10.28% and a Zacks Rank of 2.HD reported earnings beat in each of the trailing four quarters, with an average surprise of 2.3%. Its earnings for the to-be-reported quarter are expected to grow 8.9%.Williams-Sonoma, Inc. WSM currently has an Earnings ESP of +1.36% and a Zacks Rank of 3.WSM’s earnings for the to-be-reported quarter are expected to grow 5.5%. It reported earnings beat in each of the trailing four quarters, the average surprise being 17.8%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Home Depot, Inc. (HD): Free Stock Analysis Report Williams-Sonoma, Inc. (WSM): Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND): Free Stock Analysis Report Fortune Brands Innovations, Inc. 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