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Stanley Black (SWK) Shows Promise with Inorganic Activities
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We have issued an updated research report on Stanley Black & Decker, Inc. (SWK - Free Report) on Mar 29. The company specializes in manufacturing and distributing tools, and engineered security solutions. It currently has a market capitalization of approximately $20.2 billion.
Post the release of fourth-quarter 2016 results on Jan 26, shares of Stanley Black & Decker yielded a 6.37% return, outperforming the gain of 4.60% recorded by the Zacks categorized Machine Tools & Related Products industry.
We believe that Stanley Black & Decker has significant growth opportunities, backed by its organic and inorganic strategies. Of late, the company acquired meaningful businesses and made divestments. On the back of these deals, it hiked its 2017-earnings guidance to $6.98−$7.18 per share, up from the initial forecast of $6.85−$7.05. A brief discussion on these inorganic activities is provided below:
In Mar 2017, Stanley Black & Decker completed the acquisition of the tools business of Newell Brands, known as Newell Tools. The deal will strengthen the company’s tools business through deeper penetration into markets worldwide. It will add incremental earnings of 24 cents per share in year one after the closing of the transaction. In the same month, the company completed the acquisition of the Craftsman tool brand from Sears Holdings. The Craftsman brand complements the company’s global tools and storage brands as well as will open new business opportunities, especially in the lawn and garden end markets. This asset will likely add 8 cents per share to earnings in 2017.
In February, the company sold a majority portion of its Mechanical Security businesses to dormakaba. The estimated after-tax cash proceeds of approximately $700 million from the deal can be utilized for boosting the company’s more attractive businesses. However, the divestment will dilute earnings by 19 cents per share in 2017.
In addition, Stanley Black & Decker remains committed toward rewarding its shareholders through dividends payments and share buybacks. In the future, the company wishes to follow its 50/50 capital allocation strategy of acquisitions as well as reward shareholders. Dividend payout is predicted to be 30–35% in the long run.
Stanley Black & Decker currently carries a Zacks Rank #2 (Buy). Some other favorably ranked stocks in the machinery industry include Parker-Hannifin Corporation (PH - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Barnes Group, Inc. (B - Free Report) . While both Parker-Hannifin and Roper Technologies sport a Zacks Rank #1 (Strong Buy), Barnes Group carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker-Hannifin reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 12.44%. Also, bottom-line expectations for fiscal 2017 and fiscal 2018 improved over the past 60 days.
Roper Technologies’ financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Barnes Group reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 4.36%. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.
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Stanley Black (SWK) Shows Promise with Inorganic Activities
We have issued an updated research report on Stanley Black & Decker, Inc. (SWK - Free Report) on Mar 29. The company specializes in manufacturing and distributing tools, and engineered security solutions. It currently has a market capitalization of approximately $20.2 billion.
Post the release of fourth-quarter 2016 results on Jan 26, shares of Stanley Black & Decker yielded a 6.37% return, outperforming the gain of 4.60% recorded by the Zacks categorized Machine Tools & Related Products industry.
We believe that Stanley Black & Decker has significant growth opportunities, backed by its organic and inorganic strategies. Of late, the company acquired meaningful businesses and made divestments. On the back of these deals, it hiked its 2017-earnings guidance to $6.98−$7.18 per share, up from the initial forecast of $6.85−$7.05. A brief discussion on these inorganic activities is provided below:
In Mar 2017, Stanley Black & Decker completed the acquisition of the tools business of Newell Brands, known as Newell Tools. The deal will strengthen the company’s tools business through deeper penetration into markets worldwide. It will add incremental earnings of 24 cents per share in year one after the closing of the transaction. In the same month, the company completed the acquisition of the Craftsman tool brand from Sears Holdings. The Craftsman brand complements the company’s global tools and storage brands as well as will open new business opportunities, especially in the lawn and garden end markets. This asset will likely add 8 cents per share to earnings in 2017.
In February, the company sold a majority portion of its Mechanical Security businesses to dormakaba. The estimated after-tax cash proceeds of approximately $700 million from the deal can be utilized for boosting the company’s more attractive businesses. However, the divestment will dilute earnings by 19 cents per share in 2017.
In addition, Stanley Black & Decker remains committed toward rewarding its shareholders through dividends payments and share buybacks. In the future, the company wishes to follow its 50/50 capital allocation strategy of acquisitions as well as reward shareholders. Dividend payout is predicted to be 30–35% in the long run.
Stanley Black & Decker, Inc. Price and Consensus
Stanley Black & Decker, Inc. Price and Consensus | Stanley Black & Decker, Inc. Quote
Stanley Black & Decker currently carries a Zacks Rank #2 (Buy). Some other favorably ranked stocks in the machinery industry include Parker-Hannifin Corporation (PH - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Barnes Group, Inc. (B - Free Report) . While both Parker-Hannifin and Roper Technologies sport a Zacks Rank #1 (Strong Buy), Barnes Group carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker-Hannifin reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 12.44%. Also, bottom-line expectations for fiscal 2017 and fiscal 2018 improved over the past 60 days.
Roper Technologies’ financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Barnes Group reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 4.36%. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>