Yahoo Finance Here's Why You Should Add H.B. Fuller (FUL) to Your Portfolio
H.B. Fuller Company’s FUL stock looks promising at the moment. It posted robust fiscal second-quarter earnings that exceeded expectations.
Presenting a lucrative investment opportunity with strong growth prospects, FUL carries a Zacks Rank #2 (Buy).
Earnings Outperformance
In the fiscal second quarter, FUL reported adjusted earnings of $1.12 per share, surpassing the Zacks Consensus Estimate of $1.05. The company delivered earnings surprises in three of the last four quarters while missing once. The average earnings surprise over the trailing four quarters is approximately 1%.
Robust Growth Prospects
The Zacks Consensus Estimate for FUL's fiscal 2024 earnings is pegged at $4.40, indicating year-over-year growth of 13.7%. The consensus estimate for the current year experienced an upward revision of 2% in the past 30 days, underlining healthy growth potential. Earnings are expected to register 17% growth in third-quarter fiscal 2024.
An Outperformer
H.B. Fuller’s shares are up 11% in the past year against the industry’sfall of 13.3% in the same period.
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Strong Q2 Results and Upbeat Outlook
In the fiscal second quarter, H.B. Fuller reported a net income of $51 million or 91 cents, with an adjusted net income of $64 million and an adjusted earnings per share (EPS) of $1.12, surpassing expectations by 6.7%. This marks a 20% year-over-year increase, driven by significant growth in operating income.
The company's net revenues reached $917.1 million, up 2.1% from the previous year's $898.2 million and exceeding the Zacks Consensus Estimate of $910.8 million. Volume growth of 3.3% balanced out pricing adjustments and a 1.7% negative impact from foreign currency translation, while acquisitions added 3.9%.
Gross profit was $282 million, with an adjusted gross profit of $286 million, resulting in a 31.1% adjusted gross profit margin, up 210 basis points year on year. This upside can be attributed to pricing and raw material cost actions, restructuring benefits and volume leverage.
Adjusted EBITDA grew 10% year over year to $157 million, driven by pricing and raw material cost actions, higher volume, restructuring savings and acquisition gains. The adjusted EBITDA margin increased by 120 basis points to 17.1%.
For the fiscal 2024, H.B. Fuller expects year-over-year net revenue growth between 2% and 4%, with organic revenues flat to up 2%. Adjusted EPS is projected to be between $4.20 and $4.45, indicating 9-15% growth year over year. Operating cash flow is expected to be between $300 million and $350 million. Adjusted EBITDA is forecast in the band of $620-$640 million, reflecting year-over-year growth of 7-10%. For the third quarter, adjusted EBITDA is projected to be $165-$175 million.
Zacks Rank & Other Key Picks
Some other top-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, Eldorado Gold Corporation EGO and Ecolab Inc. ECL. Carpenter Technology and Eldorado Gold sport a Zacks Rank #1 (Strong Buy), and Ecolab carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.35, indicating a year-over-year rise of 282%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 93.3% in the past year.
The Zacks Consensus Estimate for EGO’s current-year earnings is pegged at $1.09, indicating a year-over-year rise of 91.2%. EGO’s earnings estimates have gone up 10% in the last 60 days. EGO beat the consensus estimate in each of the last four quarters, the average earnings surprise being 430.7%. The stock has rallied 55.5% in the past year.
The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59, indicating a rise of 26.5% from the year-ago levels. ECL beat the consensus estimate in each of the last four quarters, the average earnings surprise being 1.3%. The stock has rallied nearly 32.2% in the past year.
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Ecolab Inc. (ECL) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
H. B. Fuller Company (FUL) : Free Stock Analysis Report
Eldorado Gold Corporation (EGO) : Free Stock Analysis Report
