Stanley Black & Decker (SWK - Free Report) failed to impress investors with its recent operational performance due to reduced retail and consumer demand, supply-chain disruptions and other challenges, which are likely to impact its earnings in the near term.
The current Zacks Rank #5 (Strong Sell) player has a market capitalization of $11.7 billion. Due to the above-mentioned woes, the stock has lost 1% against the industry’s 11.3% increase in the past six months.
Let’s discuss the factors that might continue to take a toll on the firm.
Weak Segmental Performance: Reduced retail and consumer demand and the resultant softness in volumes are affecting the Tools & Outdoor segment’s performance. Within the segment, the Power Tools division is experiencing weakness (revenues down 5% organically in 2022) due to reduced consumer spending as a result of an increase in interest rates. For 2023, SWK expects segmental organic revenues to decline in the low single digits with an approximately 5% decrease in volumes.
Supply-Chain Constraints and Steep Costs: Supply-chain restrictions, primarily due to semiconductor constraints, and logistics and input cost increases weighed on Stanley Black’s operations in 2022. These headwinds pose a threat to the bottom-line performance, despite an improvement in the supply chain and an anticipated decline in raw material costs. Evidently, in 2022, the company’s cost of sales jumped 24.3% year over year. Also, selling, general and administrative expenses climbed 5.5%.
Forex Woes: Given its widespread presence in the international markets, Stanley Black is exposed to unfavorable foreign currency movements. In fourth-quarter 2022, foreign currency translation had a negative impact of 3% on sales.
Southbound Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for 2023 earnings has been revised 80.1% downward.
Stocks to Consider
Some top-ranked companies are discussed below:
Deere & Company (DE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). DE’s earnings surprise in the last four quarters was 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, estimates for Deere & Company’s fiscal 2023 earnings have increased 8.6%. The stock has rallied 15.2% in the past six months.
Alamo Group Inc. (ALG - Free Report) presently sports a Zacks Rank of 1. ALG’s earnings surprise in the last four quarters was 6.0%, on average.
In the past 60 days, estimates for Alamo’s fiscal 2023 earnings have increased 7.5%. The stock has gained 43.1% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 3.2%, on average.
In the past 60 days, estimates for A. O. Smith’s fiscal 2023 earnings have increased 4.4%. The stock has gained 38.7% in the past six months.
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Stanley Black & Decker (SWK - Free Report) failed to impress investors with its recent operational performance due to reduced retail and consumer demand, supply-chain disruptions and other challenges, which are likely to impact its earnings in the near term.
The current Zacks Rank #5 (Strong Sell) player has a market capitalization of $11.7 billion. Due to the above-mentioned woes, the stock has lost 1% against the industry’s 11.3% increase in the past six months.
Let’s discuss the factors that might continue to take a toll on the firm.
Weak Segmental Performance: Reduced retail and consumer demand and the resultant softness in volumes are affecting the Tools & Outdoor segment’s performance. Within the segment, the Power Tools division is experiencing weakness (revenues down 5% organically in 2022) due to reduced consumer spending as a result of an increase in interest rates. For 2023, SWK expects segmental organic revenues to decline in the low single digits with an approximately 5% decrease in volumes.
Supply-Chain Constraints and Steep Costs: Supply-chain restrictions, primarily due to semiconductor constraints, and logistics and input cost increases weighed on Stanley Black’s operations in 2022. These headwinds pose a threat to the bottom-line performance, despite an improvement in the supply chain and an anticipated decline in raw material costs. Evidently, in 2022, the company’s cost of sales jumped 24.3% year over year. Also, selling, general and administrative expenses climbed 5.5%.
Forex Woes: Given its widespread presence in the international markets, Stanley Black is exposed to unfavorable foreign currency movements. In fourth-quarter 2022, foreign currency translation had a negative impact of 3% on sales.
Southbound Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for 2023 earnings has been revised 80.1% downward.
Stocks to Consider
Some top-ranked companies are discussed below:
Deere & Company (DE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). DE’s earnings surprise in the last four quarters was 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, estimates for Deere & Company’s fiscal 2023 earnings have increased 8.6%. The stock has rallied 15.2% in the past six months.
Alamo Group Inc. (ALG - Free Report) presently sports a Zacks Rank of 1. ALG’s earnings surprise in the last four quarters was 6.0%, on average.
In the past 60 days, estimates for Alamo’s fiscal 2023 earnings have increased 7.5%. The stock has gained 43.1% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 3.2%, on average.
In the past 60 days, estimates for A. O. Smith’s fiscal 2023 earnings have increased 4.4%. The stock has gained 38.7% in the past six months.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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