On Thursday, Citi reiterated a Neutral rating on HB Fuller (NYSE:FUL) stock, maintaining the price target at $84.00. HB Fuller reported earnings per share (EPS) of $1.13 for the third fiscal quarter of 2024, falling short of both the $1.19 estimate set by Citi and the consensus.
The company's net revenue was reported at $918 million, which was also below the estimated $940 million. The slight year-over-year organic sales growth of approximately 0.4% was largely negated by a 2.6% decline in prices, despite a 3% increase in volume.
The adjusted EBITDA for the same quarter was $165 million, which was at the lower end of the company's guidance and beneath Citi's expectation of $170 million.
This outcome was attributed to a slowdown in market demand for certain durable goods markets in Eastern Asia, with suspected specific weaknesses in China's solar sector and slowing growth rates in the automobile and electronics industries.
Looking ahead, HB Fuller has adjusted its full-year 2024 outlook, now anticipating overall sales growth (OSG) to be flat year-over-year, a revision from the previously estimated growth of 0-2%. The midpoint adjusted EBITDA guidance for the fiscal year is set at $615 million, which is a decrease from the prior forecast of $630 million.
This adjustment implies that the expected adjusted EBITDA for the fourth fiscal quarter of 2024 will be around $170 million, compared to the consensus estimate of approximately $180 million.
A bright spot in the report was the Construction Adhesives segment, which saw double-digit OSG and an approximate 240 basis point expansion in margin.
In other recent news, H.B. Fuller Co. reported third-quarter earnings and revenue that missed analyst expectations. The company posted adjusted earnings per share of $1.13, falling short of the consensus estimate of $1.23, and revenue of $918 million, which was below analysts' projections of $944.04 million.
Furthermore, H.B. Fuller cut its fiscal 2024 outlook, now forecasting adjusted EPS of $4.10-$4.20, down from its previous guidance of $4.37, citing "year-to-date performance and current macroeconomic conditions" as the reason for the reduced forecast.
For the full year, H.B. Fuller now expects net revenue growth of approximately 2%, with organic revenue remaining flat year over year. Adjusted EBITDA is projected to be $610-$620 million, representing 5-7% growth.
Despite these challenges, the company highlighted some positives, such as a 70 basis point year-over-year expansion in adjusted EBITDA margin to 18.0% in Q3. The company also stated it remains on track to achieve its long-term margin and organic growth targets. These are among the recent developments for H.B. Fuller.
InvestingPro Insights
In light of Citi's neutral stance on HB Fuller and the company's recent earnings report, InvestingPro data and tips provide additional context for investors. An InvestingPro Tip highlights that HB Fuller has raised its dividend for 31 consecutive years, demonstrating a commitment to returning value to shareholders even amidst current market uncertainties. Additionally, the company has been profitable over the last twelve months, which may reassure investors looking for stability.
From the InvestingPro data, HB Fuller's market cap stands at $4.39 billion, with a P/E ratio of 26.65, indicating that the stock is trading at a premium relative to its earnings. The company's revenue for the last twelve months as of Q3 2024 was approximately $3.55 billion, with a slight decline of 0.5% year-over-year. However, the gross profit margin remains robust at 30.6%, reflecting the company's ability to maintain profitability. Investors may also note the dividend yield of 1.1%, coupled with a dividend growth of 8.54% during the same period, as signs of a shareholder-friendly policy.
For those seeking more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/FUL, providing deeper insights into HB Fuller's financial health and market position.
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