MarketPulse: Stanley Black & Decker Hammered, Industrials Sink
Investing.com -- Stanley Black & Decker slumped on Tuesday, dragging industrials lower, after the tools maker's guidance fell short of expectations.
More broadly, the Dow Industrials fell about 1.6%, nearly 400 points, in afternoon trading as weak earnings and global growth concerns weighed.
Stanley Black & Decker (NYSE:SWK) fell 14% after soft guidance offset above-consensus fourth-quarter earnings of $2.11 a share on $3.63 billion in revenue. Analysts were expecting earnings of $2.10 a share on $3.62 billion in revenue.
For 2019, the company said it expected adjusted earnings in the range of $8.45 to $8.65 a share, below estimates of $8.79.
The soft guidance comes as fourth-quarter margins were hurt by external headwinds, including commodity inflation, foreign exchange and tariffs, though analysts said they expected an improvement in the second quarter.
"We anticipate margin improvement to begin in Q2 as year-over-year comparisons improve and headwinds lessen," said CFRA, an independent research provider. "In 2019, we forecast 130 bps expansion to 36.5%."
The earnings report was widely expected to give market participants an insight into the strength of U.S. housing spend at a time when the underlying housing market shows little sign of improvement.
Existing home sales fell 6.4% from the prior month to a seasonally adjusted annual rate of 4.99 million units. That was the lowest print in more than three years.
A slump in Arconic (NYSE:ARNC) deepened the rout in industrials after the metal manufacturer walked away from plans to pursue a potential sale of the company just a week after reportedly rejected a $22 a share takeover bid from Apollo Global Management.
In a statement, the company said it has not "received a proposal for a full-company transaction" in the best interest of shareholders.
Arconic, which spun off the upstream aluminum business Alcoa (NYSE:AA) in late 2016, confirmed that it would still pursue a sale of its building and construction systems business.
The S&P 500 Industrials fell 2%.
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