Have you ever watched a stock that looks perfectly fine on the surface, yet something in your gut keeps whispering “this isn’t going to end well”? That’s exactly how I feel every time I dig into Fortune Brands Innovations (FBIN) these days.
Sure, the company has an upbeat name and makes some of the most recognizable brands in American homes – think Moen faucets, Therma-Tru doors, and Master Lock padlocks. But when roughly 80% of your business depends on people either building new houses or gut-renovating old ones… well, let’s just say the current housing market isn’t sending many love letters.
The Giant Elephant Standing in Every Fortune Brands Showroom
Mortgage rates are still flirting with 7%. Existing home sales are running at levels we haven’t seen since the mid-1990s. New construction? Barely limping along. And the remodeling activity – which used to be the reliable cash cow when new builds slowed – has rolled over hard as homeowners decide that swapping out perfectly good cabinets just isn’t worth tapping home equity at 9% interest.
In plain English: almost nobody is buying the ideal Fortune Brands customer right now.
I’ve followed housing-related stocks for years, and I can’t remember a time when the setup felt this structurally challenging. Temporary blips happen – 2008 was brutal but relatively quick. This feels different. Affordability is so stretched that even if the Fed cuts rates 200 basis points tomorrow, the math still doesn’t work for millions of would-be buyers or remodelers.
Third-Quarter Numbers That Spoke Volumes
The October earnings report wasn’t a disaster in the “company is going bankrupt” sense, but it was the kind of quiet disappointment that makes long-term holders nervous.
- Revenue came in at $1.15 billion – down half a percent year-over-year and short of the $1.18 billion expected
- EPS of $1.09 missed the $1.10 consensus by a penny (yes, sometimes a penny actually matters)
- Perhaps most telling: management slashed 2025 EPS guidance to $3.70–$3.80 when Wall Street had been modeling closer to $4.24
That guidance cut wasn’t accompanied by the usual “we’re just being conservative” happy talk. It felt like a genuine admission that the runway ahead is shorter than anyone hoped.
International Growth? Not Really a Lifeboat
Some investors point to Fortune Brands’ global footprint as a potential offset. The reality has been pretty brutal there too. International sales have been sliding for years. When you adjust for the inflation we’ve lived through since 2021, the drop is closer to 47% in real terms. Hardly the growth engine anyone was banking on.
What Wall Street Is Really Saying (Without Saying It)
Only about 38% of analysts covering the stock rate it a Buy. More than half are on the sidelines with Hold ratings, and a few brave souls have outright Sells. That distribution doesn’t scream “undiscovered bargain.”
In my experience, when the sell-side is this lukewarm on a consumer-discretionary name tied to housing, the path of least resistance for the stock is usually sideways to down until something fundamental actually improves.
“The trade here is simple: Fortune Brands’ fortunes rise and fall with housing activity. And there’s precious little evidence housing activity is ready to rebound anytime soon.”
An Options Idea for the Cautious (or the Convinced Bear)
If you own FBIN shares and aren’t ready to sell outright, one reasonably low-risk way to generate extra income while you wait is by selling covered calls against your position.
As of late November, the January 17, 2025 $55 calls were trading around the mid-point of a fairly wide bid-ask spread. Selling those calls would let you collect roughly 2–3% in premium over the next seven weeks while still keeping the ~2% dividend yield – pushing your total income close to 4–5% annualized if the stock stays below $55.
Of course, the trade-off is you cap your upside. If housing suddenly catches fire and the stock rockets past $55, your shares get called away. But given the current backdrop, many holders I speak with are perfectly fine collecting extra yield while they wait for clearer skies.
For the More Aggressive: Straight Bearish Option Plays
Traders who are convinced the housing freeze has further to run sometimes prefer buying straight puts or put spreads. A favorite setup lately has been the January $45/$40 put spread – paying around $1.20–$1.40 for the right to profit if shares drop below roughly $43.50 by expiration. Maximum profit kicks in under $40, which would represent roughly another 20% decline from current levels.
These kinds of defined-risk bearish spreads have been popular because they let you stay relatively small while still having meaningful downside exposure if the thesis plays out.
When Might the Picture Actually Brighten?
Realistically, we probably need at least two things:
- Mortgage rates sustainably under 6% (ideally closer to 5%)
- Some combination of lower home prices or meaningfully higher wages that restores affordability
Neither looks imminent. The Fed is cutting, but slowly. Home prices remain sticky on the way down because inventory is still abnormally low. And wage growth, while decent, hasn’t been enough to close the gap created by the 2021–2023 price surge.
Until those bigger forces shift, companies like Fortune Brands are fighting physics. You can have the best faucets in the world, but if nobody is installing new kitchens, it doesn’t much matter.
Final Takeaway
Fortune Brands isn’t broken, but it’s deeply tied to a housing market that remains deeply challenged. Earnings trends, guidance cuts, and analyst skepticism all point in the same direction.
Patient shareholders can use covered calls to squeeze extra income from a stock that may trade sideways for a while. More aggressive traders have straightforward bearish option structures available if they believe the next leg is down.
Either way, the message from the market is clear: until American housing truly thaws, Fortune Brands is likely to stay stuck in the freezer.
