# Fortune Brands Innovations (FBIN)

Sector: Building products

| Field | Value |
|---|---|
| Price | $39.96 |
| Fair value (Analysts) | $55.00 |
| Discount to fair value | 27.3% |
| Fair value uncertainty (Analysts) | High |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.6 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-11-04 (estimate) |

## In short

A weak housing market and a new leadership team hold Fortune Brands down, so sales must grow again and margins must rise without tariff refunds for the gap to close.

## Themes and gap

- Themes: New management (management-change), Interest rates (interest-rates), Tariffs and trade (trade-tariffs)
- Gap type: Can close (closable)
- Why: Quarterly results and the new team's 2027 outlook in February 2027 show within about two years whether execution and margins improve.

## About

Fortune Brands Innovations makes home, security and digital products for houses and commercial buildings. It reports three segments. Water Innovations sells faucets, showers and water products under brands such as Moen, House of Rohl, Aqualisa and SpringWell, and it is the largest segment. Outdoors sells entry doors and storm doors under the Therma-Tru and Larson brands, and composite decking under Fiberon, which it agreed to sell in October 2026. Security sells locks and safes under Master Lock, SentrySafe and Yale residential. Demand comes mainly from repair and remodel work on homes and from new home construction, and the company also sells outside the US.

## Thesis

Fortune Brands trades at a discount because its sales fall with a weak US housing market and because the market doubts that the new management can fix execution. The company expects 2026 sales to fall by a low single-digit percentage, with US repair and remodel spending down and new single-family construction down by a mid single-digit percentage. In March 2026, after talks with shareholders, Amit Banati gave up his planned move to CEO, an interim CEO took over, and Ed Garden of Garden Investments joined the Board under a cooperation agreement. Jesse Singh, the former CEO of AZEK, became CEO on June 29, 2026, and Peter Clifford became CFO on September 21, 2026. In August 2026, the company raised its 2026 EPS outlook to $3.22 to $3.52 before charges, but this includes $0.52 of one-time tariff refunds, so the outlook without refunds fell. It also wrote down Fiberon by $221 million and now sells it for $160 million. For the gap to close, sales in Water Innovations must return to growth, the operating margin before charges must rise without the tariff refunds, the new leaders must show a clear plan with cost cuts, and lower mortgage rates must help the housing market. The first test is the Q3 2026 report, expected on about November 4, 2026. The full-year report and the 2027 outlook in February 2027 will give the new team's first full plan. If execution improves, the gap can close over the next four to eight quarters. The main risk is a housing market that stays weak for longer.

## Checkpoints

- Nov 4, 2026 (estimate): Q3 2026 results: sales trend and margins. Status: Pending. Watch: Water Innovations sales that fall less than in Q2, a higher margin before charges without tariff refunds and the 2026 outlook kept pass; another sales decline of more than 4% or an outlook cut fails.
- Dec 2026 (estimate): Fiberon sale closes. Status: Pending. Watch: The sale closes within the expected 60 days for $160 million in cash passes; a failed approval or a lower price fails.
- Feb 2027 (estimate): Full-year 2026 results and the new team's 2027 outlook. Status: Pending. Watch: A 2027 outlook with sales growth, margin expansion and a clear cost plan passes; another year of falling sales and margins fails.

## Balance sheet

- Cash: $210M
- Debt: $2.6B
- Net debt: $2.4B
- EBITDA, last 12 months: $881M
- Net debt / EBITDA: 2.7× (medium)
- Undrawn credit line: $858M, to January 2031
- Last debt due: 2052

At June 27, 2026, Fortune Brands had $210 million of cash and about $2.57 billion of debt: $2.2 billion of senior notes and $374 million of commercial paper. The notes are $700 million at 3.250% due September 2029, $450 million at 4.000% due March 2032, $600 million at 5.875% due June 2033 and $450 million at 4.500% due March 2052. The company shows commercial paper as long-term debt, because its revolving credit facility backs it. The company reports net debt of $2.34 billion, based on the carrying value of debt, and net debt of 2.7 times EBITDA before charges for the 52 weeks to June 27, 2026. EBITDA here is that figure, $880.5 million. Its $1.25 billion revolving credit facility runs to January 2031, had no borrowings, and requires net debt below 3.5 times EBITDA and EBITDA above 3.0 times interest. The company had about $858 million available on the facility. In Q2 2026, it made $179 million of free cash flow and bought back $2 million of shares. It expects $370 million to $420 million of free cash flow in 2026. The sale of Fiberon for $160 million in cash, if it closes, adds to cash.

As of 2026-06-27.

Sources:

- https://www.sec.gov/Archives/edgar/data/1519751/000119312526335205/fbin-20260627.htm
- https://www.sec.gov/Archives/edgar/data/1519751/000119312526332793/fbin-ex99_1.htm
- https://www.sec.gov/Archives/edgar/data/1519751/000119312526422895/fbin-ex99_1.htm

## Recent events

- 2026-10-15: Fortune Brands agreed to sell its Fiberon composite decking business to a subsidiary of Inteplast Group for $160 million in cash. It expects to close within 60 days, subject to regulatory approval. It expects an additional non-cash impairment of about $175 million to $205 million, after a $221 million impairment of Fiberon at June 27, 2026.
- 2026-09-09: Fortune Brands named Peter Clifford CFO, effective September 21, 2026. He was CFO and Chief Operations Officer of AZEK and CFO of Filtration Group.
- 2026-08-04: Fortune Brands reported Q2 2026 results. Sales fell 4.1% to $1.15 billion. GAAP EPS was a loss of $0.19, with a $1.44 impairment charge and a $0.52 benefit from tariff refunds. EPS before charges was $1.35. Water Innovations sales fell 6.5%. It raised its 2026 EPS outlook before charges to $3.22 to $3.52 from $3.00 to $3.30, which includes $0.52 of tariff refunds and new spending to improve execution.
- 2026-07-24: The Chief Legal Officer, Hiranda Donoghue, agreed to leave the company on July 31, 2026.
- 2026-06-29: Fortune Brands appointed Jesse Singh as CEO. He led AZEK from 2016 to 2025. The interim CEO, David Barry, became Chief Operating Officer. The Board Chair took direct oversight of the Fiberon business during its strategic review.
- 2026-05-07: Fortune Brands reported Q1 2026 results. Sales fell 2% to $1.0 billion. EPS before charges fell 20% to $0.53. It cut its 2026 EPS outlook before charges to $3.00 to $3.30 from $3.35 to $3.65, because of higher commodity costs and more cautious consumers.

## Risks

- High: Demand depends on US home repair and remodel spending and on new home construction. The company expects both to fall in 2026. High mortgage rates keep home sales low, and fewer home sales lead to fewer remodels.
- High: The leadership team is new. The company had an interim CEO from March 16 to June 29, 2026, a new CFO from September 21, 2026, and an interim Chief Legal Officer. The new team must improve execution while it spends more on service and growth.
- Medium: The company imports many products and parts, and tariffs raise its landed product cost. Tariff refunds add about $81 million to 2026 operating income, but these refunds are one-time income. New tariffs can raise costs again.
- Medium: Commodity costs rose in 2026. If the company cannot raise prices enough, its margins fall. Large retail customers also have strong buying power.
- Low: The Fiberon sale needs regulatory approval and can fail. If it closes, the company receives only $160 million after impairments of about $400 million or more on the business.

## Links

- Page: https://picks.kamadorueda.com/company/FBIN/
- History of changes: https://picks.kamadorueda.com/company/FBIN/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/FBIN.json

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