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Stanley Black (SWK) Beats Q3 Earnings, '16 View Revised
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Industrial tool maker Stanley Black & Decker Inc. (SWK - Free Report) reported better-than-expected results for third-quarter 2016. The company’s earnings from continuing operations came in at $1.68 per share or $1.73 per share excluding the adverse impact of restructuring charges. The results came in above the Zacks Consensus Estimate of $1.61. Also, the bottom line exceeded the year-ago tally of $1.55.
The year-over-year increase was driven by operational efficiency and lower share count, more than offsetting the adverse impact of currency headwinds.
Stanley Black & Decker’s revenues in the quarter totaled $2.882 billion, almost in line with the Zacks Consensus Estimate. Also, the top line grew 1.9% year over year on the back of 2% and 1% positive impacts of volume and pricing, respectively, partially offset by 1% adverse impact of unfavorable currency movements.
Stanley Black & Decker reports revenue under three market segments. A brief discussion on the segment’s quarterly results is provided below:
Tools & Storage generated revenues of $1,896.9 million, up 3.2% year over year and represented 65.8% of net revenue in the quarter. Organic revenue grew 5%, while forex losses had a 2% negative impact.
Industrial segment’s revenues, accounting for roughly 16% of net revenue, came in at $463.1 million, down 3.5% year over year. The fall was triggered by volume decline of 3% and adverse price impact of 1%.
Revenues from Security, roughly 18.1% of net revenue, increased 2.1% year over year to $522.7 million. Favorable price impact of 1%, volume gain of 1% and acquisition gains of 1% were partially offset by 1% negative impact of forex losses.
Margins
In the quarter, Stanley Black & Decker’s margin profile improved as revenue growth of 1.9% was complimented by roughly 0.3% fall in cost of sales. Gross margin increased 130 basis points (bps) to 37.6%. Selling, general and administrative expenses grew 6.1% year over year while, as a percentage of revenues, it inched up 90 bps to 22.4%.
Balance Sheet & Cash Flow
Exiting the third quarter, Stanley Black & Decker had cash and cash equivalents of $420.8 million, down from $568.2 million in the preceding quarter. Long-term debt (net of current portions) was roughly flat at $3,815.1 million.
In the quarter, Stanley Black & Decker generated net cash of $246.7 million from its operating activities, compared with $239.0 million generated in the year-ago quarter. Capital spending grew 14% year over year to $78.1 million. Free cash flow was $168.6 million compared with $170.5 million recorded in the year-ago quarter.
During the quarter, Stanley Black & Decker paid cash dividends of approximately $84.5 million, and repurchased shares worth $0.6 million.
Outlook: For 2016, Stanley Black & Decker revised its earnings per share guidance to $6.40−$6.50 from $6.30−$6.50 projected earlier. The mid-point of the new guidance is at $6.45 versus the previous mid-point of $6.40.
Free cash flow conversion is predicted to be 100%.
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 Applied Industrial Technologies, Inc. (AIT - Free Report) , Barnes Group (B - Free Report) and Chart Industries Inc. (GTLS - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Applied Industrial Technologies’ earnings estimates for 2017 represents 8% growth over the year-ago tally while that for 2016 is flat year over year.
Barnes Group reported better-than-expected results in the last quarter, with a positive earnings surprise of 6.78%. Also, bottom-line expectations for 2017 have improved over the past 60 days.
Chart Industries’ financial performance has been impressive, with an average positive earnings surprise of 428.37% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.
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Stanley Black (SWK) Beats Q3 Earnings, '16 View Revised
Industrial tool maker Stanley Black & Decker Inc. (SWK - Free Report) reported better-than-expected results for third-quarter 2016. The company’s earnings from continuing operations came in at $1.68 per share or $1.73 per share excluding the adverse impact of restructuring charges. The results came in above the Zacks Consensus Estimate of $1.61. Also, the bottom line exceeded the year-ago tally of $1.55.
The year-over-year increase was driven by operational efficiency and lower share count, more than offsetting the adverse impact of currency headwinds.
Stanley Black & Decker’s revenues in the quarter totaled $2.882 billion, almost in line with the Zacks Consensus Estimate. Also, the top line grew 1.9% year over year on the back of 2% and 1% positive impacts of volume and pricing, respectively, partially offset by 1% adverse impact of unfavorable currency movements.
Segmental Detail
Stanley Black & Decker reports revenue under three market segments. A brief discussion on the segment’s quarterly results is provided below:
Tools & Storage generated revenues of $1,896.9 million, up 3.2% year over year and represented 65.8% of net revenue in the quarter. Organic revenue grew 5%, while forex losses had a 2% negative impact.
Industrial segment’s revenues, accounting for roughly 16% of net revenue, came in at $463.1 million, down 3.5% year over year. The fall was triggered by volume decline of 3% and adverse price impact of 1%.
Revenues from Security, roughly 18.1% of net revenue, increased 2.1% year over year to $522.7 million. Favorable price impact of 1%, volume gain of 1% and acquisition gains of 1% were partially offset by 1% negative impact of forex losses.
Margins
In the quarter, Stanley Black & Decker’s margin profile improved as revenue growth of 1.9% was complimented by roughly 0.3% fall in cost of sales. Gross margin increased 130 basis points (bps) to 37.6%. Selling, general and administrative expenses grew 6.1% year over year while, as a percentage of revenues, it inched up 90 bps to 22.4%.
Balance Sheet & Cash Flow
Exiting the third quarter, Stanley Black & Decker had cash and cash equivalents of $420.8 million, down from $568.2 million in the preceding quarter. Long-term debt (net of current portions) was roughly flat at $3,815.1 million.
In the quarter, Stanley Black & Decker generated net cash of $246.7 million from its operating activities, compared with $239.0 million generated in the year-ago quarter. Capital spending grew 14% year over year to $78.1 million. Free cash flow was $168.6 million compared with $170.5 million recorded in the year-ago quarter.
During the quarter, Stanley Black & Decker paid cash dividends of approximately $84.5 million, and repurchased shares worth $0.6 million.
Outlook: For 2016, Stanley Black & Decker revised its earnings per share guidance to $6.40−$6.50 from $6.30−$6.50 projected earlier. The mid-point of the new guidance is at $6.45 versus the previous mid-point of $6.40.
Free cash flow conversion is predicted to be 100%.
STANLEY B&D INC Price, Consensus and EPS Surprise
STANLEY B&D INC Price, Consensus and EPS Surprise | STANLEY B&D INC Quote
Zacks Rank & Stocks to Consider
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 Applied Industrial Technologies, Inc. (AIT - Free Report) , Barnes Group (B - Free Report) and Chart Industries Inc. (GTLS - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Applied Industrial Technologies’ earnings estimates for 2017 represents 8% growth over the year-ago tally while that for 2016 is flat year over year.
Barnes Group reported better-than-expected results in the last quarter, with a positive earnings surprise of 6.78%. Also, bottom-line expectations for 2017 have improved over the past 60 days.
Chart Industries’ financial performance has been impressive, with an average positive earnings surprise of 428.37% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.
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>>