H.B. Fuller Company: Balancing Growth Challenges with Valuation Opportunities – Hold Rating

H.B. Fuller Company (FUL) has received a new Hold rating, initiated by UBS analyst, Lucas Beaumont.

Lucas Beaumont’s rating is based on several factors that highlight both the challenges and opportunities facing H.B. Fuller Company. The company is experiencing near-term organic growth challenges, with sales growth expected to be less than 1% annually through 2027. This limited growth translates to a modest EBITDA growth of approximately 3% per year, which falls short of consensus estimates. Additionally, the company’s pricing power has historically been limited, with less than 1% annual price increases from 2010 to 2025, excluding periods of high raw material inflation.
Despite these challenges, H.B. Fuller is trading at a 19% discount to its five-year average valuation multiple, which is in line with its U.S. specialty chemical peers. The stock offers a free cash flow yield of 6.7% to 7.1% for 2026 and 2027 estimates, providing some support to its valuation. While there are downside risks related to volume and pricing, these are balanced by the company’s below-average valuation multiple and potential for incremental mergers and acquisitions, which could enhance growth prospects. Therefore, the Hold rating reflects a balanced risk/reward scenario given the current market conditions.