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Stanley Black & Decker (SWK) Q3 Earnings: What's in Store?
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Industrial tool maker Stanley Black & Decker, Inc. (SWK - Free Report) is slated to report third-quarter 2016 results on Oct 27, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.61.
Stanley Black & Decker’s financial performance was impressive in the last four quarters, with an average positive earnings surprise of 6.12%. Last quarter, the company’s earnings of $1.84 per share exceeded the Zacks Consensus Estimate of $1.72 by 6.98%. Let us see how things are shaping up for this quarter.
Factors to Affect Q3 Results
Being an international company, Stanley Black & Decker’s performance is largely influenced by prevalent uncertainties in some developed and developing nations. In July, the global economic growth forecast for 2016 was revised down to 3.1% by the International Monetary Fund. Also, unfavorable movements in foreign currencies add to the woes, largely impacting the company’s international trade.
In the U.S., the housing starts numbers in the quarter were disappointing, with a fall in month-on-month starts in August and September offsetting the gain recorded in July. Narrowing down to the micro issues, Stanley Black & Decker anticipates weakness in industrial activities to impact its top line, while incremental costs will influence margins. Also, industry rivalry, volatilities in input price & supply and failure or delay in research and development are concerns for Stanley Black & Decker.
However, a solid product portfolio, a large client base, inorganic growth initiatives and capital allocation policy are expected to work in Stanley Black & Decker’s favor. Also, the anticipated improvement in the Tools & Storage business and benefits from productivity actions will prove advantageous for the company.
Earnings Whispers
Our proven model does not conclusively show that Stanley Black & Decker will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
That is not the case here for Stanley Black & Decker as you will see below.
Zacks ESP: Earnings ESP for the stock is currently -0.62%. This is because the Most Accurate estimate of $1.60 per share stands below the Zacks Consensus Estimate of $1.61.
Zacks Rank: Stanley Black & Decker’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the machinery industry you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
AO Smith Corp. (AOS - Free Report) , with an Earnings ESP of +2.22% and a Zacks Rank #3.
Parker-Hannifin Corporation (PH - Free Report) , with an Earnings ESP of +1.40% and a Zacks Rank #3.
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Stanley Black & Decker (SWK) Q3 Earnings: What's in Store?
Industrial tool maker Stanley Black & Decker, Inc. (SWK - Free Report) is slated to report third-quarter 2016 results on Oct 27, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.61.
Stanley Black & Decker’s financial performance was impressive in the last four quarters, with an average positive earnings surprise of 6.12%. Last quarter, the company’s earnings of $1.84 per share exceeded the Zacks Consensus Estimate of $1.72 by 6.98%. Let us see how things are shaping up for this quarter.
Factors to Affect Q3 Results
Being an international company, Stanley Black & Decker’s performance is largely influenced by prevalent uncertainties in some developed and developing nations. In July, the global economic growth forecast for 2016 was revised down to 3.1% by the International Monetary Fund. Also, unfavorable movements in foreign currencies add to the woes, largely impacting the company’s international trade.
In the U.S., the housing starts numbers in the quarter were disappointing, with a fall in month-on-month starts in August and September offsetting the gain recorded in July. Narrowing down to the micro issues, Stanley Black & Decker anticipates weakness in industrial activities to impact its top line, while incremental costs will influence margins. Also, industry rivalry, volatilities in input price & supply and failure or delay in research and development are concerns for Stanley Black & Decker.
However, a solid product portfolio, a large client base, inorganic growth initiatives and capital allocation policy are expected to work in Stanley Black & Decker’s favor. Also, the anticipated improvement in the Tools & Storage business and benefits from productivity actions will prove advantageous for the company.
Earnings Whispers
Our proven model does not conclusively show that Stanley Black & Decker will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
That is not the case here for Stanley Black & Decker as you will see below.
Zacks ESP: Earnings ESP for the stock is currently -0.62%. This is because the Most Accurate estimate of $1.60 per share stands below the Zacks Consensus Estimate of $1.61.
Zacks Rank: Stanley Black & Decker’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.
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We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the machinery industry you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
AO Smith Corp. (AOS - Free Report) , with an Earnings ESP of +2.22% and a Zacks Rank #3.
Ingersoll-Rand Plc (IR - Free Report) , with an Earnings ESP of +0.78% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker-Hannifin Corporation (PH - Free Report) , with an Earnings ESP of +1.40% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>