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Stanley Black (SWK) Makes Accounting Changes, Updates View

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·4 min read
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  • SWK
  • HLIO
  • CTAS

Stanley Black & Decker, Inc. SWK updated its earnings projections for 2021. SWK also updated reported earnings (GAAP and non-GAAP) for the third quarter of 2021. The update reflects the changes it is making for calculating earnings per share.

Shares of Stanley Black have gained 3.32% on Friday, ending the trading session at $196.61.

Inside the Headlines

The above-mentioned changes have been adopted after receiving a comment letter from the Securities and Exchange Commission of the U.S. Stanley Black now considers shares that are underlying its forward stock purchase contracts in the denominator for the calculation of earnings per share.

Such considerations are in sync with the if-converted method. It required correction over Stanley Black’s earnings per share calculation done with the applied treasury stock process. GAAP earnings per share are now calculated to be $2.51 for the third quarter of 2021 and $8.17 per share for the first three quarters of 2021. Stanley Black reported GAAP earnings of $2.56 for the third quarter and $8.36 for the first nine months of 2021 on Oct 28, 2021.

SWK now calculates non-GAAP earnings of $2.71 per share for the third quarter of 2021 and $8.78 per share for the first three quarters of 2021. On Oct 28, the company reported non-GAAP earnings per share of $2.77 for the third quarter and $8.98 for the first three quarters of 2021.

Regarding projections, Stanley Black has updated its 2021-GAAP earnings to $10.00-$10.25 per share from $10.20-$10.45 mentioned on Oct 28. Adjusted non-GAAP earnings are now expected to be $10.70-$10.90 per share compared with $10.90-$11.10 mentioned on Oct 28.

Notably, the projection (implied) for the fourth quarter of 2021 has been unchanged at $1.92-$2.12 per share.

Stanley Balck also expects to close the acquisitions of Excel Industries and MTD Holdings Inc. before the end of 2021. Post-closing, SWK expects recording integration, inventory step-up, and deal costs of 20-30 cents per share.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $32 billion, Stanley Black currently carries a Zacks Rank #4 (Sell).

In the past three months, Stanley Black’s shares have lost 2% compared with the industry’s decline of 0.9%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Stanley Black’s earnings is pegged at $11.02 for 2021 and $11.90 for 2022. The consensus estimate reflects a decline of 4.5% for 2021 and 3.9% for 2022 from the respective 30-day-ago figures. The same for fourth-quarter 2021 is pegged at $2.05, marking a decline of 28.1% from the 30-day-ago figure.

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

Stocks to Consider

Some better-ranked players in the Zacks Industrial Products sector that revised projections for 2021 are discussed below.

A. O. Smith Corporation AOS increased its adjusted earnings per share projections to $2.86-$2.90 from the previously mentioned $2.70-$2.76. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AOS’ earnings surprise in the last reported quarter was 22.39% and that for the last four quarters was 16.82%, on average. In the past 30 days, A. O. Smith’s earnings estimates have increased 6.6% for 2021 and 9.3% for 2022.

Helios Technologies, Inc. HLIO increased its non-GAAP cash earnings projections to $3.75-$4.10 per share from the previously mentioned $3.60-$3.80. HLIO presently sports a Zacks Rank #1.

The results were impressive in the last reported quarter, with an earnings surprise of 30.49%. The earnings surprise, on average, for the last four quarters is 37.54%. Helios’ earnings estimates increased 7.9% for 2021 and 9.8% for 2022 in the past 30 days.

Cintas Corporation CTAS revised its earnings projection upward for fiscal 2022 (ending May 2022) to $10.60-$10.90 from the previously mentioned $10.35-$10.75. CTAS presently carries a Zacks Rank #2 (Buy).

The earnings results were impressive in the last quarter, with an earnings beat of 12.68%. The average earnings surprise in the last four quarters is 11.53%. In the past 30 days, Cintas’ earnings estimates have increased 0.3% for fiscal 2022 and 0.6% for fiscal 2023 (ending May 2023).


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