Intrinsic value of Fortune Brands Home&Security - FBHS

Previous Close

$64.16

  Intrinsic Value

$75.79

stock screener

  Rating & Target

hold

+18%

  Value-price divergence*

-43%

Previous close

$64.16

 
Intrinsic value

$75.79

 
Up/down potential

+18%

 
Rating

hold

 
Value-price divergence*

-43%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of FBHS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.87
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
Revenue, $m
  4,985
  5,344
  5,717
  6,105
  6,508
  6,927
  7,363
  7,818
  8,291
  8,784
  9,298
  9,834
  10,394
  10,978
  11,588
  12,226
  12,893
  13,590
  14,319
  15,083
  15,882
  16,718
  17,594
  18,512
  19,474
  20,482
  21,538
  22,646
  23,807
  25,025
  26,302
Variable operating expenses, $m
 
  3,530
  3,763
  4,006
  4,259
  4,521
  4,794
  5,079
  5,375
  5,684
  6,006
  6,158
  6,509
  6,875
  7,257
  7,656
  8,074
  8,510
  8,967
  9,445
  9,945
  10,469
  11,018
  11,592
  12,195
  12,826
  13,487
  14,181
  14,908
  15,671
  16,470
Fixed operating expenses, $m
 
  1,102
  1,129
  1,158
  1,187
  1,216
  1,247
  1,278
  1,310
  1,343
  1,376
  1,410
  1,446
  1,482
  1,519
  1,557
  1,596
  1,636
  1,677
  1,719
  1,762
  1,806
  1,851
  1,897
  1,944
  1,993
  2,043
  2,094
  2,146
  2,200
  2,255
Total operating expenses, $m
  4,352
  4,632
  4,892
  5,164
  5,446
  5,737
  6,041
  6,357
  6,685
  7,027
  7,382
  7,568
  7,955
  8,357
  8,776
  9,213
  9,670
  10,146
  10,644
  11,164
  11,707
  12,275
  12,869
  13,489
  14,139
  14,819
  15,530
  16,275
  17,054
  17,871
  18,725
Operating income, $m
  633
  712
  824
  941
  1,063
  1,190
  1,322
  1,461
  1,606
  1,757
  1,916
  2,265
  2,439
  2,622
  2,813
  3,013
  3,223
  3,444
  3,676
  3,919
  4,175
  4,444
  4,726
  5,023
  5,335
  5,663
  6,008
  6,371
  6,753
  7,154
  7,576
EBITDA, $m
  756
  960
  1,076
  1,197
  1,324
  1,456
  1,594
  1,738
  1,889
  2,046
  2,211
  2,384
  2,564
  2,753
  2,952
  3,160
  3,378
  3,607
  3,848
  4,100
  4,366
  4,644
  4,937
  5,245
  5,569
  5,909
  6,267
  6,643
  7,038
  7,455
  7,892
Interest expense (income), $m
  44
  50
  57
  64
  72
  80
  88
  96
  105
  114
  124
  134
  144
  155
  166
  178
  191
  204
  217
  231
  246
  262
  278
  295
  313
  331
  351
  371
  393
  416
  439
Earnings before tax, $m
  582
  662
  767
  877
  991
  1,110
  1,235
  1,365
  1,501
  1,643
  1,792
  2,132
  2,295
  2,467
  2,646
  2,835
  3,033
  3,240
  3,459
  3,688
  3,929
  4,182
  4,448
  4,728
  5,022
  5,331
  5,657
  5,999
  6,360
  6,739
  7,137
Tax expense, $m
  170
  179
  207
  237
  268
  300
  333
  368
  405
  444
  484
  576
  620
  666
  714
  765
  819
  875
  934
  996
  1,061
  1,129
  1,201
  1,277
  1,356
  1,440
  1,527
  1,620
  1,717
  1,819
  1,927
Net income, $m
  413
  483
  560
  640
  723
  810
  901
  996
  1,096
  1,200
  1,308
  1,556
  1,675
  1,801
  1,932
  2,069
  2,214
  2,366
  2,525
  2,692
  2,868
  3,053
  3,247
  3,451
  3,666
  3,892
  4,130
  4,380
  4,643
  4,919
  5,210

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  252
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,129
  5,229
  5,594
  5,973
  6,368
  6,778
  7,205
  7,649
  8,112
  8,595
  9,098
  9,623
  10,170
  10,742
  11,339
  11,963
  12,615
  13,297
  14,011
  14,758
  15,540
  16,358
  17,216
  18,114
  19,055
  20,041
  21,074
  22,158
  23,294
  24,486
  25,736
Adjusted assets (=assets-cash), $m
  4,877
  5,229
  5,594
  5,973
  6,368
  6,778
  7,205
  7,649
  8,112
  8,595
  9,098
  9,623
  10,170
  10,742
  11,339
  11,963
  12,615
  13,297
  14,011
  14,758
  15,540
  16,358
  17,216
  18,114
  19,055
  20,041
  21,074
  22,158
  23,294
  24,486
  25,736
Revenue / Adjusted assets
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
Average production assets, $m
  1,698
  1,822
  1,949
  2,082
  2,219
  2,362
  2,511
  2,666
  2,827
  2,995
  3,171
  3,353
  3,544
  3,744
  3,952
  4,169
  4,396
  4,634
  4,883
  5,143
  5,416
  5,701
  6,000
  6,313
  6,641
  6,984
  7,345
  7,722
  8,118
  8,533
  8,969
Working capital, $m
  602
  374
  400
  427
  456
  485
  515
  547
  580
  615
  651
  688
  728
  768
  811
  856
  902
  951
  1,002
  1,056
  1,112
  1,170
  1,232
  1,296
  1,363
  1,434
  1,508
  1,585
  1,666
  1,752
  1,841
Total debt, $m
  1,431
  1,629
  1,836
  2,051
  2,274
  2,507
  2,749
  3,001
  3,264
  3,537
  3,822
  4,120
  4,430
  4,755
  5,093
  5,447
  5,817
  6,204
  6,608
  7,032
  7,475
  7,939
  8,425
  8,934
  9,468
  10,027
  10,613
  11,228
  11,872
  12,548
  13,256
Total liabilities, $m
  2,767
  2,965
  3,172
  3,387
  3,610
  3,843
  4,085
  4,337
  4,600
  4,873
  5,158
  5,456
  5,766
  6,091
  6,429
  6,783
  7,153
  7,540
  7,944
  8,368
  8,811
  9,275
  9,761
  10,270
  10,804
  11,363
  11,949
  12,564
  13,208
  13,884
  14,592
Total equity, $m
  2,362
  2,264
  2,422
  2,586
  2,757
  2,935
  3,120
  3,312
  3,513
  3,722
  3,939
  4,167
  4,404
  4,651
  4,910
  5,180
  5,462
  5,758
  6,067
  6,390
  6,729
  7,083
  7,454
  7,843
  8,251
  8,678
  9,125
  9,594
  10,086
  10,602
  11,144
Total liabilities and equity, $m
  5,129
  5,229
  5,594
  5,973
  6,367
  6,778
  7,205
  7,649
  8,113
  8,595
  9,097
  9,623
  10,170
  10,742
  11,339
  11,963
  12,615
  13,298
  14,011
  14,758
  15,540
  16,358
  17,215
  18,113
  19,055
  20,041
  21,074
  22,158
  23,294
  24,486
  25,736
Debt-to-equity ratio
  0.606
  0.720
  0.760
  0.790
  0.820
  0.850
  0.880
  0.910
  0.930
  0.950
  0.970
  0.990
  1.010
  1.020
  1.040
  1.050
  1.060
  1.080
  1.090
  1.100
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.160
  1.170
  1.180
  1.180
  1.190
Adjusted equity ratio
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  413
  483
  560
  640
  723
  810
  901
  996
  1,096
  1,200
  1,308
  1,556
  1,675
  1,801
  1,932
  2,069
  2,214
  2,366
  2,525
  2,692
  2,868
  3,053
  3,247
  3,451
  3,666
  3,892
  4,130
  4,380
  4,643
  4,919
  5,210
Depreciation, amort., depletion, $m
  123
  248
  252
  257
  262
  267
  272
  277
  283
  289
  295
  118
  125
  132
  139
  147
  155
  163
  172
  181
  191
  201
  211
  222
  234
  246
  259
  272
  286
  300
  316
Funds from operations, $m
  753
  731
  812
  897
  985
  1,077
  1,173
  1,274
  1,379
  1,488
  1,603
  1,674
  1,800
  1,932
  2,071
  2,216
  2,369
  2,529
  2,697
  2,873
  3,059
  3,254
  3,458
  3,674
  3,900
  4,138
  4,388
  4,651
  4,928
  5,220
  5,526
Change in working capital, $m
  102
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  71
  74
  78
  81
  85
  89
Cash from operations, $m
  651
  706
  786
  869
  957
  1,048
  1,143
  1,242
  1,345
  1,454
  1,567
  1,637
  1,761
  1,891
  2,028
  2,172
  2,322
  2,480
  2,646
  2,820
  3,003
  3,195
  3,397
  3,609
  3,833
  4,067
  4,314
  4,574
  4,847
  5,134
  5,437
Maintenance CAPEX, $m
  0
  -60
  -64
  -69
  -73
  -78
  -83
  -88
  -94
  -100
  -105
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -181
  -191
  -201
  -211
  -222
  -234
  -246
  -259
  -272
  -286
  -300
New CAPEX, $m
  -149
  -125
  -127
  -132
  -137
  -143
  -149
  -155
  -161
  -168
  -175
  -183
  -191
  -199
  -208
  -217
  -227
  -238
  -249
  -260
  -272
  -285
  -299
  -313
  -328
  -344
  -360
  -378
  -396
  -415
  -436
Cash from investing activities, $m
  -385
  -185
  -191
  -201
  -210
  -221
  -232
  -243
  -255
  -268
  -280
  -295
  -309
  -324
  -340
  -356
  -374
  -393
  -412
  -432
  -453
  -476
  -500
  -524
  -550
  -578
  -606
  -637
  -668
  -701
  -736
Free cash flow, $m
  266
  521
  595
  669
  746
  826
  911
  998
  1,090
  1,186
  1,287
  1,342
  1,452
  1,567
  1,688
  1,815
  1,948
  2,087
  2,234
  2,388
  2,549
  2,719
  2,897
  3,085
  3,282
  3,490
  3,708
  3,938
  4,179
  4,433
  4,701
Issuance/(repayment) of debt, $m
  -806
  198
  207
  215
  224
  233
  242
  252
  262
  274
  285
  297
  310
  324
  339
  354
  370
  387
  405
  423
  443
  464
  486
  509
  534
  559
  586
  614
  644
  676
  709
Issuance/(repurchase) of shares, $m
  -409
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -152
  198
  207
  215
  224
  233
  242
  252
  262
  274
  285
  297
  310
  324
  339
  354
  370
  387
  405
  423
  443
  464
  486
  509
  534
  559
  586
  614
  644
  676
  709
Total cash flow (excl. dividends), $m
  111
  719
  801
  884
  969
  1,059
  1,153
  1,250
  1,353
  1,460
  1,572
  1,640
  1,763
  1,892
  2,027
  2,169
  2,318
  2,474
  2,638
  2,811
  2,992
  3,183
  3,384
  3,594
  3,816
  4,049
  4,294
  4,552
  4,823
  5,109
  5,409
Retained Cash Flow (-), $m
  89
  -154
  -158
  -164
  -171
  -178
  -185
  -192
  -200
  -209
  -218
  -227
  -237
  -248
  -259
  -270
  -282
  -295
  -309
  -323
  -339
  -354
  -371
  -389
  -407
  -427
  -448
  -469
  -492
  -516
  -541
Prev. year cash balance distribution, $m
 
  252
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  817
  643
  719
  799
  881
  968
  1,058
  1,152
  1,251
  1,354
  1,412
  1,526
  1,644
  1,768
  1,899
  2,035
  2,179
  2,329
  2,488
  2,654
  2,829
  3,012
  3,205
  3,408
  3,622
  3,847
  4,083
  4,331
  4,593
  4,868
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  777
  580
  611
  635
  652
  663
  666
  662
  651
  632
  587
  559
  526
  489
  448
  406
  362
  318
  276
  235
  197
  162
  131
  104
  80
  61
  45
  33
  23
  16
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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.

FINANCIAL RATIOS  of  Fortune Brands Home&Security (FBHS)

Valuation Ratios
P/E Ratio 23.8
Price to Sales 2
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 19.6
Growth Rates
Sales Growth Rate 8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.5%
Cap. Spend. - 3 Yr. Gr. Rate 9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 60.6%
Total Debt to Equity 60.6%
Interest Coverage 14
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 6.8%
Return On Total Capital 11.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity 17.2%
Return On Equity - 3 Yr. Avg. 12.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 36.4%
Gross Margin - 3 Yr. Avg. 35%
EBITDA Margin 15%
EBITDA Margin - 3 Yr. Avg. 13.6%
Operating Margin 12.7%
Oper. Margin - 3 Yr. Avg. 11.2%
Pre-Tax Margin 11.7%
Pre-Tax Margin - 3 Yr. Avg. 10.5%
Net Profit Margin 8.3%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 29.2%
Eff/ Tax Rate - 3 Yr. Avg. 30.9%
Payout Ratio 23.7%

FBHS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FBHS stock intrinsic value calculation we used $4985 million for the last fiscal year's total revenue generated by Fortune Brands Home&Security. The default revenue input number comes from 2016 income statement of Fortune Brands Home&Security. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FBHS stock valuation model: a) initial revenue growth rate of 7.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.1%, whose default value for FBHS is calculated based on our internal credit rating of Fortune Brands Home&Security, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Fortune Brands Home&Security.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FBHS stock the variable cost ratio is equal to 66.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1075 million in the base year in the intrinsic value calculation for FBHS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Fortune Brands Home&Security.

Corporate tax rate of 27% is the nominal tax rate for Fortune Brands Home&Security. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FBHS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FBHS are equal to 34.1%.

Life of production assets of 28.4 years is the average useful life of capital assets used in Fortune Brands Home&Security operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FBHS is equal to 7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2362 million for Fortune Brands Home&Security - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 153.27 million for Fortune Brands Home&Security is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Fortune Brands Home&Security at the current share price and the inputted number of shares is $9.8 billion.

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COMPANY NEWS

▶ Fortune Brands Home & Security posts 2Q profit   [Aug-02-17 09:35PM  Associated Press]
▶ Updating Your Kitchen or Bathroom?   [Jul-26-17 02:15PM  PR Newswire]
▶ Fortune Brands Declares Quarterly Dividend   [Jul-24-17 08:00AM  Business Wire]
▶ Fortune Brands Home & Security Is Poised for a Breakout   [Jun-27-17 10:54AM  TheStreet.com]
▶ Fortune Brands Declares Quarterly Dividend   [May-01-17 05:50PM  Business Wire]
▶ Fortune Brands Home & Security posts 1Q profit   [Apr-26-17 04:26PM  Associated Press]
▶ Indexes Higher As Retail Leads; 2 Lesser-Known Stocks Hit Buy Points   [Apr-06-17 01:27PM  Investor's Business Daily]
▶ Therma-Tru Previews New Products   [Feb-08-17 12:25PM  Business Wire]
▶ Mastering The Art Of Multitasking   [08:57AM  PR Newswire]
▶ What Makes Americans Steam at the Stovetop?   [Dec-22-16 09:15AM  Marketwired]
▶ How Do You Know When You're an Adult?   [Dec-20-16 09:15AM  Marketwired]
▶ Fortune Brands Increases Quarterly Dividend by 13 Percent   [Dec-13-16 04:05PM  Business Wire]
▶ Is Fortune Brands Home & Security Inc (FBHS) A Good Stock To Buy?   [Dec-09-16 06:04PM  at Insider Monkey]
▶ ConAgra Splits Its Menu, but We're Not Hungry   [07:00AM  at Morningstar]
▶ The Download on Dirty Dishes   [Nov-22-16 09:15AM  Marketwired]
Stock chart of FBHS Financial statements of FBHS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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