Stanley Black & Decker, Inc. SWK announced the pricing of $500-million notes offering due to expire on Mar 1, 2026. In addition to this, the company announced the launch of a product brand, STANLEY Earth.
Notably, shares of this industrial tool maker increased 0.4% on Feb 27, ending the trading session at $136.46.
Details on Notes Offering
As noted, the company priced the notes offering at 99.858% of the principal amount (plus accrued interest). The notes carry a coupon rate of 3.4%, which will be paid semi-annually on Mar 1 and Sep 1. The first interest payment will be made on Sep 1, 2019.
Ratings of the issuance are expected to be ‘Baa1 (Stable)’ by Moody's, ‘A (Stable)’ by Standard & Poor’s and ‘A- (Stable)’ by Fitch.
This offering is anticipated to close on Mar 1, 2019.
Stanley Black anticipates net proceeds of $495.8 million from the offering. This amount is after deducting offering expenses as well as commissions and discounts to underwriters. The company intends to use the proceeds for repaying debt and funding general corporate purposes.
Stanley Black has a highly leveraged balance sheet. Its long-term debt was at $3,819.8 million at the end of 2018, reflecting increase of 35.1% from the previous year. Also, the company’s total debt/total equity was at 48.5% at the end of 2018, up from 46.1% at the end of 2017. Interest expenses in 2018 were $209.2 million, up 14.6% year over year.
Although the current notes offering will help in repaying the company’s debts, we believe that it will also add to its existing debt balance. Unwarranted rise in debt levels, in turn, can inflate Stanley Black’s financial obligations and hurt profitability.
Launch of STANLEY Earth
Concurrent with the notes offering, on the same day, Stanley Black announced the launch of the brand, STANLEY Earth. The brand will include the company’s purpose-driven product technologies.
To begin with, the company launched a solar-powered water pump named NADI under its STANLEY Earth brand. This pump, which is low in cost and eco-friendly, will help in irrigation for agricultural purposes. The product is available in India.
Zacks Rank & Stocks to Consider
With a market capitalization of $21 billion, Stanley Black currently carries a Zacks Rank #3 (Hold). In the past 60 days, the Zacks Consensus Estimate for earnings has decreased 3.2% to $8.56 for 2019 and 4.2% to $9.45 for 2020.
Over the last three months, the company’s share price increased 7%, outperforming the industry’s growth of 3.9%.
Some better-ranked stocks in the Zacks Industrial Products sector are Chart Industries, Inc. GTLS, Roper Technologies, Inc. ROP and Dover Corporation DOV. All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, earnings estimates for 2019 improved for Chart Industries, Roper and Dover. Further, the earnings surprise in the last reported quarter was positive 12.96% for Chart Industries, 2.88% for Roper and 10.85% for Dover.
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