Head-To-Head Review: Valmont Industries (VMI) versus Fortune Brands Home & Security (FBHS)

Valmont Industries (NYSE: VMI) and Fortune Brands Home & Security (NYSE:FBHS) are both mid-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, valuation, dividends and risk.

Dividends



Valmont Industries pays an annual dividend of $1.50 per share and has a dividend yield of 0.9%. Fortune Brands Home & Security pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Valmont Industries pays out 17.9% of its earnings in the form of a dividend. Fortune Brands Home & Security pays out 24.8% 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. Fortune Brands Home & Security is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Valmont Industries has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Fortune Brands Home & Security has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500.

Insider and Institutional Ownership

85.3% of Valmont Industries shares are held by institutional investors. Comparatively, 89.0% of Fortune Brands Home & Security shares are held by institutional investors. 3.3% of Valmont Industries shares are held by insiders. Comparatively, 1.6% of Fortune Brands Home & Security shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Valmont Industries and Fortune Brands Home & Security’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Valmont Industries 7.02% 14.56% 6.24%
Fortune Brands Home & Security 8.62% 18.64% 8.85%

Valuation & Earnings

This table compares Valmont Industries and Fortune Brands Home & Security’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Valmont Industries $2.52 billion 1.47 $173.23 million $8.37 19.57
Fortune Brands Home & Security $4.98 billion 1.98 $413.20 million $2.90 22.37

Fortune Brands Home & Security has higher revenue and earnings than Valmont Industries. Valmont Industries is trading at a lower price-to-earnings ratio than Fortune Brands Home & Security, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations for Valmont Industries and Fortune Brands Home & Security, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Valmont Industries 0 1 3 0 2.75
Fortune Brands Home & Security 0 8 8 0 2.50

Valmont Industries presently has a consensus price target of $176.00, indicating a potential upside of 7.45%. Fortune Brands Home & Security has a consensus price target of $69.46, indicating a potential upside of 7.08%. Given Valmont Industries’ stronger consensus rating and higher possible upside, research analysts clearly believe Valmont Industries is more favorable than Fortune Brands Home & Security.

Summary

Fortune Brands Home & Security beats Valmont Industries on 11 of the 17 factors compared between the two stocks.

Valmont Industries Company Profile

Valmont Industries, Inc. is a producer of fabricated metal products, and steel, aluminum and composite pole, tower and other structures, and mechanized irrigation systems. The Company’s segments are Engineered Support Structures (ESS); Utility Support Structures; Energy and Mining; Coatings; Irrigation, and Other. The ESS segment manufactures steel, aluminum, and composite poles and structures. The Utility Support Structures Segment manufactures steel and concrete pole structures for electrical transmission, substation and distribution applications. The Energy and Mining Segment produces access systems, which are engineered structures and components that allow people to move safely in an industrial, infrastructure or commercial facility. The Coatings Segment consists of galvanizing, anodizing and powder coating services on a global basis. The Irrigation Segment manufactures and distributes mechanical irrigation equipment and related service parts under the Valley brand name.

Fortune Brands Home & Security Company Profile

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.

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