A month has gone by since the last earnings report for Stanley Black & Decker (SWK Quick QuoteSWK - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Stanley Black & Decker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Stanley Black's Q3 Earnings Beat Estimates, Revenues Down Y/Y

Stanley Black reported third-quarter 2024 adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate of $1.03. The bottom line increased 16.2% year over year.

Stanley Black’s net sales of $3.75 billion missed the consensus estimate of $3.78 billion. The top line declined 5.1% year over year due to weakness in both segments.

Segmental Discussion

Revenues from the company’s primary segment, Tools & Outdoor, totaled $3.26 billion, which declined 2.7% year over year. Our estimate for segmental revenues was $3.3 billion.

Revenues from the Industrial segment grossed $488.0 million, down 18.5% year over year. Our estimate for segmental revenues was $511.4 million.

Margin Profile

Stanley Black’s cost of sales decreased 9.1% year over year to $2.6 billion. The gross profit increased 5.7% year over year to $1.1 billion. The gross margin increased 310 basis points (bps) year over year to 29.9%.

Selling, general and administrative expenses increased 0.4% year over year to $797.1 million. Adjusted EBITDA was $406.4 million, indicating year-over-year growth of 9.3%. The margin increased 140 bps to 10.8%.

Balance Sheet and Cash Flow

While exiting the third quarter, Stanley Black had cash and cash equivalents of $298.7 million compared with $449.4 million at the end of fourth-quarter 2023. The long-term debt balance was $5.6 billion, lower than $6.1 billion reported at the end of fourth-quarter 2023.

In the first nine months of 2024, net cash generated in operating activities was $285.8 million, down 35.6% year over year. Capital and software expenditures totaled $239.4 million, up from $216.4 million reported in the year-ago period. Free cash flow (before dividends) was $188.4 million compared with $205.6 million a year ago.

In the first nine months of the year, it paid out dividends worth $367.2 million to its shareholders, up 1.8% from the year-ago period.

2024 Guidance

Stanley Black expects adjusted earnings to be in the range of $3.90-$4.30 per share compared with $3.70-$4.50 per share anticipated earlier. The company anticipates earnings to be in the range of $1.15-$1.75 per share.

Stanley Black expects a free cash flow in the range of $0.65-$0.85 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -17.66% due to these changes.

VGM Scores

Currently, Stanley Black & Decker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stanley Black & Decker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Stanley Black & Decker belongs to the Zacks Manufacturing - Tools & Related Products industry. Another stock from the same industry, Enerpac (EPAC Quick QuoteEPAC - Free Report) , has gained 8.9% over the past month. More than a month has passed since the company reported results for the quarter ended August 2024.

Enerpac reported revenues of $158.71 million in the last reported quarter, representing a year-over-year change of -1.2%. EPS of $0.50 for the same period compares with $0.42 a year ago.

Enerpac is expected to post earnings of $0.42 per share for the current quarter, representing a year-over-year change of +7.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Enerpac. Also, the stock has a VGM Score of B.