Stanley Black & Decker Faces Challenges Despite Earnings Beat
New Britain, Connecticut’s Stanley Black & Decker, Inc. (SWK), known for its hand tools, power tools, outdoor products, and engineered fastening systems, has a market cap of $13.5 billion and operates across the Americas, Europe, and Asia.
However, the company has significantly underperformed the broader market over the past year. SWK stock has dropped 10.8% year-to-date and shown a modest 2.8% increase over the last 52 weeks, while the S&P 500 Index ($SPX) experienced a remarkable 25.5% gain in 2024 and a 35.5% increase over the past year.
Diving deeper, SWK also trailed behind the Industrial Select Sector SPDR Fund (XLI), which rose 24.5% year-to-date and achieved 38.4% returns over the same period.
In an unexpected turn, shares of Stanley Black & Decker fell 8.8% following their Q3 earnings announcement on October 29, despite reporting results that exceeded expectations. The company has prioritized enhancing operations and transforming its supply chain to improve fill rates and align inventory with customer demand, leading to greater efficiency and a remarkable 16.9% growth in adjusted net earnings from continuing operations, totaling $185 million. Additionally, their adjusted EPS of $1.22 beat analyst forecasts by 18.5%.
On the downside, net sales declined by 5.1% year-over-year and 6.8% compared to the previous quarter, reaching $3.8 billion. This was attributed to reduced sales volumes, unfavorable currency impacts, and the divestiture of their infrastructure business, which unsettled investors.
Looking ahead, analysts predict a substantial 184.8% increase in adjusted EPS for the current fiscal year, ending in December, forecasting earnings of $4.13. Notably, SWK has a track record of surpassing Wall Street earnings expectations in each of the past four quarters.
The consensus rating for SWK is currently a “Hold.” Among the 15 analysts covering the stock, four recommend a “Strong Buy,” nine suggest a “Hold,” and two propose a “Strong Sell.”
This configuration has remained consistent over the last three months.
On October 31, Baird analyst Timothy Wojs maintained a “Neutral” rating while adjusting the price target down to $102. Currently, the mean price target for SWK is $105.09, a potential upside of 20.1% from current levels. The highest forecast from analysts stands at $135, indicating a potential increase of 54.3%.
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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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