Diversity in operations can be boring sometimes. Fortunately, it's the good kind of boring, where you can predict strong income and cash flows no matter what the circumstances. In the case of Fortune Brands
Compared to the second quarter of 2005, the wine and spirits division leapfrogged golfing in revenues, thanks to the acquisition of several Allied Domecq brands of hard liquor and wine last summer. (Income Investor selection Diageo
I find it especially interesting that combined operating margins expanded by 0.2 percentage points, even though two out of three business units saw significantly worse operational efficiency than last year. Hardware pulled that wagon to the barn this time, thanks to a modest margin improvement; its sales outstripped the other two divisions combined.
It's curious to find hardware doing so well -- and in a very organic manner at that -- given concerns about slowdowns in the housing market. It looks like Fortune has figured out how to push its products to remodelers and do-it-yourselfers, a good market to cultivate if the housing bubble pops entirely.
While it may be frustrating at times to compete with large specialists like Diageo and Brown-Forman
Further Foolish reading:
- Learn how to find great dividend-payers yourself.
- There are many conglomerates smaller than Fortune out there ...
- ... but plenty of bigger ones, too.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolishdisclosureenjoys a nice round of golf and a cool mint julep after a long day of home repairs.