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Stanley Black & Decker, Inc.’s (NYSE:SWK) announced its latest earnings update in December 2018, which indicated that the business faced a immense headwind with earnings declining by -47%. Today I want to provide a brief commentary on how market analysts perceive Stanley Black & Decker’s earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems positive, with earnings growing by a significant 84%. This strong growth in earnings is expected to continue, bringing the bottom line up to US$1.5b by 2022.
While it is helpful to be aware of the growth rate year by year relative to today’s level, it may be more beneficial determining the rate at which the business is growing on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Stanley Black & Decker’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 18%. This means, we can anticipate Stanley Black & Decker will grow its earnings by 18% every year for the next few years.
For Stanley Black & Decker, I’ve put together three pertinent aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is SWK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SWK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SWK? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.