Protection safety equipment & services provider Fortune Brands Home & Security, Inc. is slated to report first-quarter 2017 results on Apr 26, before the market opens.

Over the last three months, the company’s shares yielded 10.21% return, outperforming the gain of 0.30% recorded by the Zacks categorized Protection Safety Equipment & Services industry.

Also, the company performed well in the last four quarters, beating estimates on all occasions with an average positive earnings surprise of 8.99%. Let us see how things are shaping up for Fortune Brands Home & Security this quarter.

Factors to Affect Q1 Results

We believe that Fortune Brands Home & Security’s exposure to risks arising from international operations, stiff competition and uncertain economic conditions in some foreign nations might have adversely impacted its financials in the to-be-reported quarter. Also, a highly leveraged balance sheet will increase the company’s financial obligations and hence hurt profitability.

In addition, the company consistently makes research and development for improvement of its services and development of new products. Failure of such initiatives might significantly impact its competitive position. Also, risks associated with sudden inflation in raw materials price or supply shortage can impact the company’s operational process and margins.

However, Fortune Brands Home & Security’s businesses are highly dependent on the housing market, especially home improvement, repair and remodel, and new home construction activity levels in North America. For 2017, the company anticipates the U.S. home products market to grow 6–7% while the global market is expected to rise 5–6%. Management predicts sales growth to be within 6–8% in the year.

Earnings Whispers

Our proven model does not conclusively show that Fortune Brands Home & Security will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here for as you will see below.

Zacks ESP: Earnings ESP for the stock is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 46 cents.

Zacks Rank: Fortune Brands Home & Security has a Zacks Rank #4 (Sell).
 
As it is, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies in the industrial products sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Parker-Hannifin Corporation (PH Quick QuotePH - Free Report) , with an Earnings ESP of +0.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Actuant Corporation , with an Earnings ESP of +2.50% and a Zacks Rank #3.

Colfax Corporation , with an Earnings ESP of +10.00% and a Zacks Rank #3.

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