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Stanley Black Shares Gain 21% in 3 Months: What's Driving It?

Zacks Equity Research
·3 min read

Shares of Stanley Black & Decker, Inc. SWK have gained notably in the past three months. Growth opportunities stemming from the healthy U.S. retail channels as well as impacts of cost-saving measures seem to have boosted sentiments for the stock.

The New Britain, CT-based company belongs to the Zacks Manufacturing - Tools & Related Products industry. The industry — part of the Zacks Industrial Products sector — is among the top 5% (with rank of 12) of more than 250 Zacks industries.

Stanley Black currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, the company’s shares have gained 21.1% against the industry’s decline of 3%. Notably, the S&P 500 has risen 12.4% and the sector has grown 14.5% during the same period.

Factors Influencing the Stock

In the past three months, Stanley Black has reported results for first-quarter 2020, with an earnings beat of 6.2%. However, results declined on a year-over-year basis on weak sales performance and a dip in margins. The pandemic-related concerns made the company suspend its projections for 2020. It also halted, though temporarily, its acquisition and buyback activities.

Despite the above-mentioned concerns, the overall revival in the broader market and the company’s expectation of better organic results (with sales expected to fall 15-20% versus 35-45% mentioned earlier) for the second quarter might have supported the price improvement. It believes that healthy U.S. retail channels might have been beneficial in the second quarter. Among businesses, improvements in tools and storage as well as global security are expected.

In addition, synergistic gains from acquired assets, shareholder-friendly policies, solid product offerings and innovation efforts are other tailwinds for Stanley Black. In February 2020, the company acquired Consolidated Aerospace Manufacturing. The buyout is expected to aid Stanley Black’s engineered fastening business of the Industrial segment.

Also, the company’s solid liquidity position will likely help in deleveraging and effectively face financial stress caused by the pandemic. Further, cost-saving measures will likely be boons.

Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $5.43 for 2020 and $7.02 for 2021, marking increases of 8% and 4% from the respective 60-day-ago figures. Notably, there have been five upward revisions (versus one downward change) for 2020 and four upward revisions (versus one downward) for 2021 in the past 60 days.

Stanley Black Decker, Inc. Price and Consensus


Stanley Black  Decker, Inc. Price and Consensus
Stanley Black Decker, Inc. Price and Consensus

Stanley Black Decker, Inc. price-consensus-chart | Stanley Black Decker, Inc. Quote

Also, earnings estimates for the second quarter have improved from 11 cents to 59 cents per share in the past 60 days. Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.

Stanley Black’s Performance Versus Three Peers

The company outperformed three peers — including Kennametal Inc. KMT, Lincoln Electric Holdings, Inc. LECO and Allegion plc ALLE — in the past three months. During the period, Kennametal, Lincoln Electric and Allegion’s shares have gained 14%, 10.1% and 3.6%, respectively.

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