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Bear of the Day: Stanley Black & Decker (SWK)

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Stanley Black & Decker (SWK - Free Report) is in the midst of a business transformation while it also has to fight inflationary pressures and the challenging macroeconomic environment. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall for the second year in a row in 2023.

Stanley Black & Decker is the world's largest tool company with nearly 50 manufacturing facilities in the United States and more than 100 worldwide.

It produces power tools, hand tools, storage, digital tool solutions, lifestyle products, outdoor products, engineered fasteners and other industrial equipment. It's iconic brands include DEWALT, BLACK+DECKER, CRAFTSMAN, STANLEY, CUB CADET, HUSTLER AND TROY-BILT.

Earnings Estimates for 2022 and 2023 Continue to Fall

Stanley Black & Decker will report fourth quarter and full year results on Feb 2, 2023. What will it guide for 2023?

Last quarter, on Oct 27, 2022, it lowered its full year guidance to a range of $4.15 to $4.65 from $5.00 to $6.00. As you might assume, analysts lowered their estimates accordingly.

But they have continued to cut.

1 estimate has been cut for 2022 in the last 30 days. 2022 earnings are now expected to fall 57.6% from last year to $4.44, down from $10.48.

Analysts are also still bearish on 2023. 2 estimates have been lowered over the last 30 days. Earnings are expected to fall another 5.8% to $4.18. That's down from $6.71 just 3 months ago.

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Image Source: Zacks Investment Research

It's because of these earnings estimates cuts that the stock has fallen to a Zacks Rank #5 (Strong Sell). The cuts are bearish.

Shares Plunge Below the COVID Lows

Shares of Stanley Black & Decker have fallen 51% over the last year but even more devastating to long-term investors, the shares are now down 48% over the last 5 years as well.

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Image Source: Zacks Investment Research

Yes, the shares have gotten a bid to start 2023, rising 20.7% over the last month but they aren't cheap, with a forward P/E of 20.5.

The good news is that it is still shareholder friendly, paying both a dividend, which it raised for the 55th consecutive year again last year, and doing a share buy back. The dividend is yielding 3.7%.

But there is a lot of uncertainty heading into this earnings report. Investors might want to wait on the sidelines to see what the outlook is for 2023.


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