Fortune Brands Innovations, Inc. (FBIN) stock intrinsic value fair value estimate & owner earnings analysis

Fortune Brands Innovations makes branded home products sold mostly through home centers and distributors: Moen and House of Rohl plumbing (Water, $2.45 billion of 2025 sales), Therma-Tru doors, Fiberon decking and Larson storm doors (Outdoors, $1.32 billion), and Master Lock, Yale and August locks and security products (Security, $0.69 billion). Home Depot and Lowe's each accounted for 11% of 2025 sales. The company was reshaped when it spun off its cabinet business (MasterBrand) at the end of 2022, so we measure the business only from 2023 onward; earlier years describe a different company. How we measure earnings: we start from operating cash flow, remove swings in working capital (inventory, receivables, payables), subtract stock compensation as a real cost, and subtract capital spending. Owner earnings came to $2.56 per share in 2023, $3.88 in 2024 and $3.86 in 2025. Non-cash charges such as intangible amortization ($75.5 million in 2025) and the $53.6 million 2025 impairment on assets held for sale are added back, since they are sunk acquisition costs; the risk that brands and acquired businesses fade is carried in the cases below rather than in the earnings level. Sales fell in each of the last three years, so none of the capital spending is treated as growth spending. We used $3.86 per share as the starting level: the median of the three years, and equal to 2025, when net income fell about 37% to $298.8 million but cash earnings held up because restructuring and impairment charges were largely non-cash or timing related. Owner earnings changed by about -0.5% in 2025, and we assume no growth in the first year of the base case. Base case, about $54 per share: owner earnings stay flat at roughly $3.85 per share for ten years, then decline slowly at 2% a year as no replacement growth engine can be named beyond the existing brands. We credit no growth. Sales have been flat to falling ($4.72 billion in 2022 to $4.46 billion in 2025), and we do not count on a housing or remodeling recovery, share gains, new products or margin expansion. What we do credit is persistence: Moen, Therma-Tru and Master Lock have sold through the same home-center channels for decades. Company guidance for 2026 capital spending of $110 million to $140 million matches the 2025 level of $111.8 million, so the low 2025 spending is not a one-year anomaly. Bear case, about $30 per share: owner earnings fall back to the 2023 level of about $2.60 per share and drift down 1.5% a year, fading at 4% a year after year ten. Named pressures: China sales have dropped from $335 million in 2023 to $234 million in 2024 and $147 million in 2025 (they drove the entire Water decline in 2025); tariff-related and raw material cost inflation cut 2025 operating income by 30%; and the Outdoors segment's operating income fell 58% in 2025. Leverage also matters here: total debt is $2.5 billion, including $369 million of commercial paper, with a credit facility that limits debt to 3.5 times covenant EBITDA. The facility was renewed in January 2026 to run to 2031 and no default existed at year-end, but less room for error worsens the downside. Bull case, about $67 per share: owner earnings rise to about $4.40 per share and hold, fading 1% a year after year ten. This rests only on actions already taken and paid for: $109.1 million of 2025 restructuring charges for consolidating regional offices into one headquarters, product-line rationalization in Outdoors and plant closures in all three segments, which should lower costs, and capital spending staying near the disclosed $110 to $140 million range. We do not assume any recovery in demand. One thing we could not reconcile fully: the non-cash lease expense add-back and the related lease payments are both in the cash flow statement, and we treated that add-back as offsetting part of the accrued liabilities line rather than as working capital. Owner earnings are after interest cost, so no debt has been subtracted from the values above. What would make this wrong: a further step down in Water volumes beyond China, tariff costs that cannot be passed through in pricing, or the loss of shelf space at either Home Depot or Lowe's, which together are about 22% of sales.