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What's in Store for Stanley Black & Decker (SWK) Q1 Earnings?

Zacks Equity Research

Stanley Black & Decker, Inc. SWK is slated to report first-quarter 2019 results on Apr 24, before the market opens.

The company delivered better-than-expected results in three of the last four quarters while recorded in-line results once. Average earnings surprise was a positive 8.13%. In the last reported quarter, its earnings of $2.11 met the Zacks Consensus Estimate.

In the last three months, shares of Stanley Black & Decker increased 22.9% compared with the industry’s growth of 19.7%.

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

Factors Likely to Influence Q1 Results

Industrial tool makers are reaping benefits of growing use of e-retailing, infrastructure investments, favorable policy changes, use of sophisticated technologies in manufacturing process, and new construction and remodeling activities. Growth in industrial production also represents favorable operating environment. However, a decelerating rate of growth is concerning. To add to the woes, global uncertainties and trade tension between the United States and China dimmed growth prospects of the global economy.

Aside from these broader factors, Stanley Black & Decker’s results can be influenced by number of company-specific matters. Focus on innovation, growing demand for Craftsman, Lenox, Irwin and DeWalt FlexVolt products, strengthening business opportunities in emerging markets, and e-commerce business will be boon for the company. Also, lower share count on account of share buyback activities, cost-saving actions and synergistic gains from acquired assets are also likely to boost results in the to-be-reported quarter.

However, commodity inflation (net of impact from pricing actions), tariffs and foreign currency woes will hurt earnings. Also, tax rate of 17.5% will be an impediment. In the first quarter of 2019, earnings per share are predicted to be roughly 13% of the full-year guidance, with the percentage reflecting a decline of 400 basis points from the year-ago quarter.

For the Tools & Storage segment, Stanley Black & Decker anticipates organic revenues to grow in a mid-single digit for 2019. Though growth prospects are strong for this segment, the last two quarters of negative sales surprise are concerning. For the first quarter of 2019, the Zacks Consensus Estimate for revenues is pegged at $2,262 million, reflecting 12.4% sequential decline and 2.1% year-over-year growth. Segmental profits will likely suffer from adverse impacts of commodity inflation, tariffs and foreign currency woes.

For the Industrial segment, the company expects organic sales to be relatively flat year over year in 2019 due mainly to softness in the automotive end market. Further, transformational activities will influence the Security segment’s results, with organic sales growth likely to be in a low-single digit.

For the first quarter of 2019, the Zacks Consensus Estimate for Industrial revenues is pegged at $533 million, reflecting 2.9% sequential decline and 5.8% growth from the year-ago figure. Moreover, the Zacks Consensus Estimate for Security revenues is pegged at $488 million, reflecting decline of 3.2% from the previous quarter and 0.2% from the year-ago quarter.

Average sales surprise for the last four quarters is positive 7.7% for the Industrial segment and positive 1.1% for the Security segment.

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: The company has an Earnings ESP of -0.97%, with the Most Accurate Estimate of $1.10 below the Zacks Consensus Estimate of $1.11.

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. This rank combined with negative ESP makes earnings prediction difficult.

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.

Sun Hydraulics Corporation SNHY has an Earnings ESP of +1.05% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

HD Supply Holdings, Inc. HDS currently has an Earnings ESP of +1.01% and a Zacks Rank #3.

Colfax Corporation CFX presently has an Earnings ESP of +0.91% and a Zacks Rank #3.

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Stanley Black & Decker, Inc. (SWK) : Free Stock Analysis Report
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