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Stanley Black & Decker (SWK) Q4 Earnings: What's in Store?

Zacks Equity Research

Stanley Black & Decker, Inc. SWK is slated to report fourth-quarter 2018 results on Jan 22, before the market opens.

The company pulled off average positive earnings surprise of 8.60% for the last four quarters, beating estimates in all occasions. In the last reported quarter, its earnings of $2.08 surpassed the Zacks Consensus Estimate of $2.02.

In the last three months, the shares of this industrial tool maker increased 12.3% compared with the industry’s growth of 7.5%.

Let us see how things are shaping up for Stanley Black & Decker this quarter.

Factors Likely to Drive Q4 Results

We believe that industrial machinery and tool makers are currently benefiting from favorable operating environment in the United States. In this regard, growth in industrial production, better housing markets, infrastructural developments and healthy demand for the U.S.-manufactured machinery are a few tailwinds.

In addition to the above tailwinds, Stanley Black & Decker is gaining from rising growth opportunities in the e-commerce platform, strengthening business in emerging markets and focus on innovation. Further, the company’s popular brands like Craftsman, DeWalt FlexVolt, Lenox and Irwin are adding strength. Buyouts have been proving beneficial for Stanley Black & Decker too.

Stanley Black & Decker has not provided any separate projection for the fourth quarter. However, a look at the yearly forecast will fairly provide a picture for the to-be-reported quarter. For 2018, the company predicts adjusted earnings of $8.10-$8.20. Notably, lower tax rates and other adjustments will benefit bottom-line results by 15 cents per share. Alternatively, lower organic growth will adversely impact earnings by 15 cents while headwinds related to higher input costs, induced by forex woes, tariffs and commodities, will lower earnings by 25 cents.

For the Tools & Storage segment, Stanley Black & Decker anticipates organic revenues to grow in a high-single digit. Average sale surprise for the last four quarters is 2.1%. For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $2,590 million, reflecting 6.6% increase from revenues generated in the year-ago quarter.

For Industrial and Security segments, the company predicts organic revenues to remain relatively flat year over year. Average sales surprise for the last four quarters is positive 7.1% for the Industrial segment and positive 1.7% for the Security segment. Further, the Zacks Consensus Estimate for revenues for Industrial and Security segments are pegged at $515 million and $506 million, respectively. Estimates reflect growth of 8.6% for the Industrial segment and decline of 0.8% for the Security segment from sales generated a year ago.

Earnings Whispers

Our proven model provides some idea on stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Stanley Black & Decker has been provided below.

Earnings ESP: Stanley Black & Decker has an Earnings ESP of 0%. Both the Zacks Consensus Estimate and Most Accurate Estimate for the quarter are at $2.11.

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise


Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise | Stanley Black & Decker, Inc. Quote

Zacks Rank: Stanley Black & Decker currently carries a Zacks Rank #3.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Stocks to Consider

Here are some companies in the Zacks Industrial Products sector that you may want to consider as according to our model these have the right combination of elements to post an earnings beat this quarter.

Cintas Corporation CTAS currently carries a Zacks Rank #2 and has an Earnings ESP of +0.27%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Plug Power, Inc. PLUG presently carries a Zacks Rank #3 and has an Earnings ESP of +23.91%.

Terex Corporation TEX currently carries a Zacks Rank #3 and has an Earnings ESP of +3.17%.

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