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What's in Store for Stanley Black's (SWK) Q4 Earnings?

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Stanley Black & Decker, Inc. (SWK - Free Report) is scheduled to release fourth-quarter 2022 results on Feb 2, before the market open.

The Zacks Consensus Estimate for Stanley Black’s fourth-quarter earnings has remained steady in the past 60 days. SWK delivered better-than-expected results thrice in the last four quarters and missed the mark once, the earnings surprise being 4.1%, on average.

Let’s see how things are shaping up for Stanley Black this earnings season.

Stanley Black & Decker, Inc. Price and EPS Surprise

 

Factors to Note

Healthy demand for aerospace fasteners, recovery in narrow-body and wide-body OEM production and robust Engineered Fastening business are expected to have benefited the Industrial Segment in the to-be-reported quarter. Also, innovation, pricing and cyclical recoveries across most of the portfolio are likely to have aided the segment’s growth in the fourth quarter. Our estimate for the segment’s revenues in the fourth quarter indicates a 4.1% rise from the year-ago reported number. The Zacks Consensus Estimate for the same indicates a 4.6% rise from the year-ago figure.

Stanley Black acquired Excel Industries and MTD Holdings in December 2021. The buyouts boosted its channel opportunities, strengthened innovation capabilities and enhanced product offerings so far and are expected to have contributed to its top-line growth in the fourth quarter.

However, persistent weakness in the company’s Tools & Outdoor segment, caused by reduced retail and consumer demand, is expected to have dented its fourth-quarter performance. The Zacks Consensus Estimate for the Tools & Outdoor segment’s revenues indicates a 2.3% decrease from the year-ago figure.

Also, supply-chain restrictions (primarily semiconductor constraints) and logistics and input cost increases are likely to have exerted pressure on the company’s margins and profitability in the fourth quarter. Adverse foreign currency movements are expected to have impacted SWK’s overseas business revenues.

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Stanley Black this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here, as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Stanley Black has an Earnings ESP of -69.70%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: Stanley Black currently carries a Zacks Rank #5 (Strong Sell).

Highlights of Q3 Earnings

Stanley Black reported impressive third-quarter 2022 results. SWK’s earnings beat the Zacks Consensus Estimate by 4.1% and sales beat the same by 0.1%. In the reported quarter, SWK’s adjusted earnings were 76 cents per share, beating the Zacks Consensus Estimate of 73 cents. However, the bottom line decreased 72.6% from the year-ago quarter’s $2.77. In the quarter under review, Stanley Black’s net sales were $4,119.6 million, reflecting year-over-year growth of 9%. SWK’s top line beat the Zacks Consensus Estimate of $4,116 million.

Stocks to Consider

Here are some companies within the broader Industrial Products sector which according to our model have the right combination of elements to beat on earnings this reporting cycle.

Caterpillar (CAT - Free Report) has an Earnings ESP of +1.14% and a Zacks Rank of 3. The company is scheduled to release fourth-quarter earnings numbers on Jan 31.

Caterpillar’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.7%.

Xylem Inc. (XYL - Free Report) has an Earnings ESP of +2.1% and a Zacks Rank of 3. The company is scheduled to release fourth-quarter 2022 results on Feb 2.

Xylem’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 13.3%.

Illinois Tool Works (ITW - Free Report) has an Earnings ESP of +1.92% and a Zacks Rank of 3. The company is slated to release fourth-quarter 2022 results on Feb 2.

Illinois Tool’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.2%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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