Back to top

Image: Bigstock

What Led Stanley Black & Decker to a New 52-Week High?

Read MoreHide Full Article

Shares of Stanley Black & Decker, Inc. (SWK - Free Report) reached a new 52-week high of $118.47 on Jul 14, before closing the trading session slightly lower at $117.46. This apex improved upon the last 52-week high of $117.61 reached on Jul 13, 2016.

The machinery company yielded a year-to-date return of 11.2%. The trading volume for the session was 0.59 million shares. Positive earnings estimate revisions for 2016, along with an expected earnings growth rate of 10.2% for the next five years indicate the scope for further stock price appreciation.

Growth Drivers

Stanley Black & Decker’s financial results have been impressive in three out of four trailing quarters, with an average positive earnings surprise of 4.54%. Last quarter, the company’s earnings of $1.32 per share surpassed the Zacks Consensus Estimate of $1.19 by 10.9%. The company’s share price has gained roughly 5.1% since the first-quarter earnings release on Apr 21.

For 2016, Stanley Black & Decker anticipates earnings per share to be within $6.20−$6.40 range, above $6.00−$6.20 projected earlier. Organic revenue is expected to grow within 3−4% as compared with 3% anticipated earlier. The revised forecast is driven by improved Tools & Storage business as well as lower currency headwinds.

On a segmental basis, organic revenues are projected to increase in mid-single digit range for Tools & Storage segment and in low-single digits for Security segments. For the Industrial segment, organic revenue is predicted to be relatively flat.
 
In addition, Stanley Black & Decker remains focused on development of innovative products as well as enhancement of global cost competitiveness. Also, industrial production in the U.S improved 0.6% month-on-month in April but inched down 0.4% in May. Despite these mixed data, we believe improvements in the industrial production in the country will help machinery companies like Stanley Black & Decker to boost their businesses.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for Stanley Black & Decker grew 0.16% to $6.36 for 2016, while the same grew 1.2% to $1.71 for second-quarter 2016. These estimates represent year-over-year growth of 3.9% for 2016 and 10.8% for the second quarter. Also, the company has an Earnings ESP of +1.10% for 2016.

STANLEY B&D INC Price and Consensus

STANLEY B&D INC Price and Consensus | STANLEY B&D INC Quote

With a market capitalization of $17.6 billion, Stanley Black & Decker currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Middleby Corp. (MIDD - Free Report) , Nordson Corp. (NDSN - Free Report) and IDEX Corp. (IEX - Free Report) . While both Middleby and Nordson sport a Zacks Rank #1 (Strong Buy), IDEX Corporation carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Published in