Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
As Stanley Black & Decker, Inc. (NYSE:SWK) announced its earnings release on 29 December 2018, analysts seem extremely confident, as a 97% rise in profits is expected in the upcoming year, compared with the historical 5-year average growth rate of 9.1%. With trailing-twelve-month net income at current levels of US$605m, we should see this rise to US$1.2b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Stanley Black & Decker going to perform in the near future?
Over the next three years, it seems the consensus view of the 18 analysts covering SWK is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SWK’s earnings growth over these next few years.
This results in an annual growth rate of 19% based on the most recent earnings level of US$605m to the final forecast of US$1.5b by 2022. This leads to an EPS of $10.01 in the final year of projections relative to the current EPS of $4.06. With a current profit margin of 4.3%, this movement will result in a margin of 9.7% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Stanley Black & Decker, I’ve put together three pertinent aspects you should further research:
- 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 Stanley Black & Decker 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 Stanley Black & Decker is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stanley Black & Decker? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.