HomeMarket NewsThe Resurgence of Stanley Black & Decker: A Bright Light Amidst the...

The Resurgence of Stanley Black & Decker: A Bright Light Amidst the Gloom

Actionable Trade Ideas

always free

Investing aficionados know that sometimes the strongest opportunities reveal themselves in times of adversity. Such is the case currently with Stanley Black & Decker (NYSE:SWK). Although the company has faced recent challenges, the management is optimistic about the future, projecting a promising upturn in 2024. Here is a breakdown of why this iconic industrial giant is a prime candidate for a $1,000 investment today.

A Gloomy Past: The Troubled Bottom Line of Stanley Black & Decker

In 2021, following the turbulence of the COVID-19 pandemic, Stanley Black & Decker delivered an exceptional performance, reporting full-year adjusted earnings of $10.48 per share – a substantial 30% increase from 2020, setting a record for the company. The surge was attributed partly to the uptick in home improvement projects during the pandemic. However, this positive trajectory took a sharp downturn at the beginning of 2022 when the company provided a forecasts far below expectations, leading to full-year adjusted earnings of just $4.62 per share. Management swiftly initiated a comprehensive turnaround strategy involving cost-cutting measures, restructuring, debt reduction, and efficiency enhancements.

Despite these efforts, 2023 brought more disappointing news, with the company anticipating another challenging year, projecting full-year adjusted earnings ranging from breakeven to $2.00 per share. The final outcome for 2023 was $1.45 per share, marking a second consecutive year of decline. The downtrend raised concerns about the company’s future and its ability to regain momentum.

A Beacon of Hope: The Anticipated Revitalization in 2024

Looking ahead, Stanley Black & Decker’s leadership remains positive about 2024. Management predicts adjusted earnings to range between $3.50 and $4.50 per share by the end of the year. This forecast hints at a potential 140% to 210% surge from the previous year, signifying a significant rebound in earnings. However, after a prolonged period of decline, investor skepticism is understandable, with the stock still trading over 50% below its 2021 peak. For dividend investors who value consistent returns, the company’s status as a Dividend King with 56 straight years of dividend increases adds to the allure of investing in Stanley Black & Decker.

SWK Chart

SWK data by YCharts

Despite recent challenges, the company has shown resilience by steadily increasing dividends, reaffirming its commitment to shareholders amid turbulent times. In the face of headwinds, even modest dividend raises demonstrate the company’s long-term perspective and confidence in overcoming current obstacles. The unwavering dedication to maintaining Dividend King status reflects the management’s belief in the company’s enduring strength.

The Dawn of a New Era: Can Stanley Black & Decker Regain its Earnings Momentum?

If Stanley Black & Decker successfully reverses its earnings trajectory, investor sentiment towards the stock is likely to turn more positive. A consistent upward trend in adjusted gross margin further supports the expectation of an impending earnings revival. While the turbulent journey of this industrial giant has made it a hard sell for some, signs indicate that a turning point has been reached, setting the stage for a potentially substantial earnings recovery. Investors eyeing the historically high 3.3% dividend yield of Stanley Black & Decker need to delve deeper into the company’s progress before the release of first-quarter earnings.

Is a $1,000 Investment in Stanley Black & Decker Warranted at Present?

Before committing funds to Stanley Black & Decker, it’s advisable to pause and consider one crucial factor:

The Motley Fool Stock Advisor analysts have pinpointed what they consider the 10 best stocks for investors to consider, but Stanley Black & Decker did not make the list. The selected stocks are anticipated to deliver remarkable returns in the upcoming years.

Stock Advisor furnishes investors with a user-friendly roadmap for success, including portfolio construction guidance, regular analyst updates, and two new stock recommendations monthly. Since 2002, the Stock Advisor service has outstripped the S&P 500’s returns by over triple*.

Discover the 10 stocks

*Stock Advisor returns as of March 25, 2024.

Reuben Brewer holds positions in Stanley Black & Decker. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool maintains a disclosure policy.

The perspectives and opinions presented herein are those of the author and do not necessarily mirror the views of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.