Reviewing Fortune Brands Home & Security (FBHS) and Simpson Manufacturing (SSD)
Fortune Brands Home & Security (NYSE: FBHS) and Simpson Manufacturing (NYSE:SSD) are both mid-cap industrial products companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.
Volatility and Risk
Fortune Brands Home & Security has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Simpson Manufacturing has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500.
Institutional & Insider Ownership
88.1% of Fortune Brands Home & Security shares are owned by institutional investors. Comparatively, 83.6% of Simpson Manufacturing shares are owned by institutional investors. 1.6% of Fortune Brands Home & Security shares are owned by company insiders. Comparatively, 0.4% of Simpson Manufacturing shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings & Valuation
This table compares Fortune Brands Home & Security and Simpson Manufacturing’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Fortune Brands Home & Security||$5.13 billion||1.97||$822.40 million||$2.84||23.15|
|Simpson Manufacturing||$914.03 million||2.55||$171.24 million||$2.05||24.02|
Fortune Brands Home & Security has higher revenue and earnings than Simpson Manufacturing. Fortune Brands Home & Security is trading at a lower price-to-earnings ratio than Simpson Manufacturing, indicating that it is currently the more affordable of the two stocks.
Fortune Brands Home & Security pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Simpson Manufacturing pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. Fortune Brands Home & Security pays out 25.4% of its earnings in the form of a dividend. Simpson Manufacturing pays out 41.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Fortune Brands Home & Security has raised its dividend for 3 consecutive years and Simpson Manufacturing has raised its dividend for 3 consecutive years.
This table compares Fortune Brands Home & Security and Simpson Manufacturing’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Fortune Brands Home & Security||8.61%||18.93%||8.88%|
This is a summary of current ratings and price targets for Fortune Brands Home & Security and Simpson Manufacturing, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Fortune Brands Home & Security||0||6||8||0||2.57|
Fortune Brands Home & Security presently has a consensus price target of $68.00, indicating a potential upside of 3.42%. Given Fortune Brands Home & Security’s higher probable upside, analysts clearly believe Fortune Brands Home & Security is more favorable than Simpson Manufacturing.
Fortune Brands Home & Security beats Simpson Manufacturing on 9 of the 15 factors compared between the two stocks.
About Fortune Brands Home & Security
Fortune Brands Home & Security, Inc. is a holding company. The Company operates through four segments. The Cabinets segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names, including Aristokraft, Mid-Continent, Diamond, Kitchen Classics, Kitchen Craft, Schrock, Omega, Homecrest, Thomasville, StarMark and Ultracraft. The Plumbing segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks and waste disposals under the Moen, Riobel, ROHL, Perrin & Rowe, and Waste King brands. The Doors segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name and urethane millwork product lines under the Fypon brand name. The Security segment includes locks, safety and security devices and electronic security products under the Master Lock brand name and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name.
About Simpson Manufacturing
Simpson Manufacturing Co., Inc., through its subsidiary, Simpson Strong-Tie Company Inc. (SST), designs, engineers and manufactures wood construction products, including connectors, truss plates, fastening systems, fasteners and pre-fabricated lateral systems used in light-frame construction. The Company’s segments are North America, Europe, Asia/Pacific, and Administrative & All Other. The North America segment includes operations primarily in the United States and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands and Belgium. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, South Africa, China, Taiwan and Vietnam. The Company manufactures concrete construction products used for concrete, masonry, steel construction and for concrete repair, protection and strengthening, including adhesives, chemicals and mechanical anchors.
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