Stanley Black & Decker, Inc. SWK yesterday provided an update on its second-quarter revenues, while taking part in the 2020 UBS Global Industrials and Transportation virtual conference.
The indication of a rise in the expectation for second-quarter revenues has lifted sentiments for the stock, which is evident from a 5.2% increase in the company’s share price. The closing trade price for the stock was $137.95 yesterday.
Inside the Headlines
Stanley Black noted that retail channels in the United States — with double-digit growth in POS performance — are likely to perform better than previously expected. The improvement will primarily be seen for the global security business and the company’s Tools & Storage segment. The Security business is now predicted to fall 10% as compared with the initial expectation of a 25% decline in the second quarter.
Considering the above-mentioned improvements, the company now expects an organic sales decline of 15-20% for the second quarter. This marks an improvement from a 35-45% decline anticipated in April and a decrease of 20-30% communicated in May.
Also, the company reiterated that cost-reduction measures announced in April 2020 — including indirect costs, compensation areas, benefits and deflation categories — are expected to be beneficial. As noted earlier, these cost-saving actions are expected to yield annualized savings of $1 billion.
For the second quarter of 2020, the Zacks Consensus Estimate for earnings is pegged at 48 cents, reflecting a decline of 77.9% from the 60-day-ago figure. The consensus estimate for revenues is pegged at $2.5 billion, suggesting a decline of 33.5% from the year-ago reported figure.
Zacks Rank, Earnings Estimates and Price Performance
Stanley Black, with a market capitalization of $20.2 billion, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from innovative products, favorable e-commerce trends and inorganic activities. However, it presently is exposed to the adverse impacts of the pandemic and so withdrew projections for 2020. Forex woes and tariffs are other concerns.
In the past three months, Stanley Black’s shares have increased 8% compared with the industry’s growth of 6.7%.
The Zacks Consensus Estimate for the company's earnings is pegged at $5.33 for 2020 and $7.00 for 2021, reflecting declines of 35.7% and 25% from the respective 60-day-ago figures.
Stanley Black Decker, Inc. Price and Consensus
Stanley Black Decker, Inc. price-consensus-chart | Stanley Black Decker, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the Zacks Industrial Products sector are Silgan Holdings Inc. SLGN, II-VI Incorporated IIVI and Broadwind Energy, Inc. BWEN. While both Silgan and II-VI currently sport a Zacks Rank #1 (Strong Buy), Broadwind Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for Silgan and II-VI have improved for the current year, while have been unchanged for Broadwind Energy. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 213.33% for II-VI and 200% for Broadwind Energy.
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