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Stanley Black (SWK) Inks Deal to Divest Oil & Gas Business

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Stanley Black & Decker, Inc. (SWK - Free Report) recently entered into an agreement with Pipeline Technique Limited to divest its STANLEY oil & gas division. The financial terms of the transaction were kept under wraps.

Shares of SWK declined 1.6% yesterday to eventually close the trading session at $107.5.

Based in Aberdeenshire, Scotland, Pipeline Technique offers welding, field joint coating, non-destructive testing, fabrication, and other products and services to oil and gas industries.

Inside the Headlines

The deal will involve Stanley Black to sell its oil & gas division, which includes the company’s pipeline services and equipment businesses. Its pipeline services and equipment businesses comprise three units, namely STANLEY Inspection, Pipeline Induction Heat Ltd. and CRC-Evans Pipeline International. The business contributed revenues of about $140 million in 2021. Some of the notable products offered by the unit are standard and unique nut products, threaded inserts screw thread inserts, torque tool solutions and breakstem rivets, among others.

The divestment is in sync with SWK’s strategy of restructuring its business portfolio. The transaction will enable Stanley Black to better focus on and efficiently direct its resources to the Industrial and Tools & Outdoor segments, thus offering shareholder value.

SWK expects to bear a pre-tax, non-cash charge of about $125-$200 million for the divestment of this division. The completion of the transaction is subject to certain customary conditions.

Zacks Rank, Price Performance and Earnings Estimate Trend

Stanley Black, with a $16.2-billion market capitalization, currently carries a Zacks Rank #4 (Sell). SWK stands to benefit from solid product offerings, a positive e-commerce trend and strengthening demand in the end markets. However, SWK has been dealing with escalating costs and expenses, which might affect its margins and profitability in the quarters ahead.

Zacks Investment Research
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Shares of SWK have lost 24.9% compared with the 22.9% decline of its industry in the past three months.

The Zacks Consensus Estimate for 2022 earnings has decreased 9.5% to $11.01 in the past 60 days. Earnings estimates for 2023 have moved 11.6% south to $12.63 during the same period.

Stocks to Consider

Some better-ranked companies from the industrial products sector are discussed below:

IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX delivered a trailing four-quarter earnings surprise of 2.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

IDEX’s earnings estimates have increased 1.9% for 2022 in the past 60 days. Its shares have declined 7.5% in the past three months.

Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank of 2. Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 0.4% for 2022. The stock has declined 18.1% in the past three months.

Nordson Corporation (NDSN - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 4.5%, on average.

In the past 60 days, NDSN’s earnings estimates have increased 3.1% for 2022. The stock has declined 11.8% in the past three months.