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Stanley Black (SWK) Up 21.1% YTD: Will the Momentum Continue?
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Stanley Black & Decker, Inc. (SWK - Free Report) appears to be in good shape, with its shares increasing by 21.1% in the year-to-date period compared with the industry’s 20.5% growth.
Catalysts Behind the Share Price Increase
Stanley Black is making efforts to eliminate and reduce overlapping capabilities and functions. It is resizing operations to ensure that resources better serve core businesses. In the first six months of 2023, SWK generated pre-tax run-rate savings of $460 million from its global cost-reduction program. The company expects to generate run-rate savings of $1 billion from this program in 2023. By 2025, the company expects run-rate savings of $2 billion.
The company’s commitment to handsomely reward its shareholders through dividends and share buybacks is encouraging. In the first half of 2023, the company paid dividends of $239.5 million, up 4% year over year. SWK also bought back shares worth $5.6 million in the same period. In July, the company hiked its dividend by a penny to 81 cents per share (annually: $3.24 per share).
Image Source: Zacks Investment Research
Will the Uptrend in Shares Last?
Stanley Black’s global cost-reduction program is expected to aid its bottom line and drive margin performance in the quarters ahead. However, near-term softness in the industrial business due to temporary channel inventory reductions may weigh on SWK’s performance. Lower demand in the Tools & Outdoor segment due to reduced consumer spending is an added concern for the company.
A softer demand environment due to a slowdown in the manufacturing sector is expected to weigh on Stanley Black’s performance in 2023. SWK anticipates organic growth to decline in mid-single digits this year. For 2023, the company expects adjusted earnings per share in the range of 70 cents to $1.30. In 2022, it reported adjusted earnings (from continuing operations) of $4.62 per share.
Zacks Rank & Stocks to Consider
Stanley Black currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased by 10.6% for 2023. The stock has gained 17.8% in the year-to-date period.
Eaton Corporation plc (ETN - Free Report) currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased by 4% for 2023. The stock has soared 50.1% in the year-to-date period.
A. O. Smith Corp. (AOS - Free Report) presently carries a Zacks Rank #2. AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased by 2.9% for 2023. The stock has gained 22.6% in the year-to-date period.
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Stanley Black (SWK) Up 21.1% YTD: Will the Momentum Continue?
Stanley Black & Decker, Inc. (SWK - Free Report) appears to be in good shape, with its shares increasing by 21.1% in the year-to-date period compared with the industry’s 20.5% growth.
Catalysts Behind the Share Price Increase
Stanley Black is making efforts to eliminate and reduce overlapping capabilities and functions. It is resizing operations to ensure that resources better serve core businesses. In the first six months of 2023, SWK generated pre-tax run-rate savings of $460 million from its global cost-reduction program. The company expects to generate run-rate savings of $1 billion from this program in 2023. By 2025, the company expects run-rate savings of $2 billion.
The company’s commitment to handsomely reward its shareholders through dividends and share buybacks is encouraging. In the first half of 2023, the company paid dividends of $239.5 million, up 4% year over year. SWK also bought back shares worth $5.6 million in the same period. In July, the company hiked its dividend by a penny to 81 cents per share (annually: $3.24 per share).
Image Source: Zacks Investment Research
Will the Uptrend in Shares Last?
Stanley Black’s global cost-reduction program is expected to aid its bottom line and drive margin performance in the quarters ahead. However, near-term softness in the industrial business due to temporary channel inventory reductions may weigh on SWK’s performance. Lower demand in the Tools & Outdoor segment due to reduced consumer spending is an added concern for the company.
A softer demand environment due to a slowdown in the manufacturing sector is expected to weigh on Stanley Black’s performance in 2023. SWK anticipates organic growth to decline in mid-single digits this year. For 2023, the company expects adjusted earnings per share in the range of 70 cents to $1.30. In 2022, it reported adjusted earnings (from continuing operations) of $4.62 per share.
Zacks Rank & Stocks to Consider
Stanley Black currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. (CAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased by 10.6% for 2023. The stock has gained 17.8% in the year-to-date period.
Eaton Corporation plc (ETN - Free Report) currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased by 4% for 2023. The stock has soared 50.1% in the year-to-date period.
A. O. Smith Corp. (AOS - Free Report) presently carries a Zacks Rank #2. AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased by 2.9% for 2023. The stock has gained 22.6% in the year-to-date period.