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Reasons Why You Should Avoid Betting on Stanley Black Stock Right Now
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Key Takeaways
SWK's Engineered Fastening segment fell 20.7% in Q1, hurt by auto market weakness and a business divestiture.
Rising costs and expenses have been pressuring the company's margins and profitability.
Long-term debt stands at $4.8B, while cash levels remain low and earnings estimates have been cut sharply.
Stanley Black & Decker, Inc. (SWK - Free Report) has failed to impress investors with its recent operational performance due to weakness across its businesses, high debt and operational expenses.
Based in New Britain, CT, Stanley Black is engaged in designing, manufacturing and marketing tools (power and hand tools), engineered fastening systems, outdoor products and related accessories. On a geographical basis, the company has operations in the United States (61.9% of 2024 net revenues), Canada (4.8%), other Americas (5.7%), Europe (19.6%) and Asia (8%).
Let’s discuss the factors that continue taking a toll on the firm.
Factors Affecting Stanley Black
Business Weakness: Softness in the Engineered Fastening segment remains a major concern. Stanley Black is witnessing persistent weakness in the automotive end market, owing to headwinds in the automotive OEM light vehicle production and constrained capex spending. Also, the divestiture of the infrastructure business has been impacting the segment’s sales. Revenues from the Engineered Fastening segment in first-quarter 2025 declined 20.7% year over year to $463.7 million. However, strength across the aerospace and general industrial markets has been acting as a tailwind.
High Costs & Expenses: The company is dealing with escalating expenses as management has stepped up investments in innovation and growth initiatives. In the first quarter, its SG&A expenses increased 1.8% year over year to $867 million. The metric, as a percentage of net sales, increased 120 bps to reach 23.2%. Also, the company’s cost of sales, as a percentage of net sales, was up 130 bps to 29.9%. We don’t see the SG&A hit to profitability mitigating recently and a few basis points (as a percentage of total revenues) increase is expected in 2025.
SWK Stock’s Price Performance
Image Source: Zacks Investment Research
Year to date, the Zacks Rank #5 (Strong Sell) company has lost 15.1% against the industry’s 0.7% growth.
High Debt Level: Exiting first-quarter 2025, the company’s long-term debt remained high at $4.8 billion. Its current maturities of long-term debt totaled $849.4 million. Considering its debt level, its cash and cash equivalents of $344.8 million do not look impressive. High debt levels can increase financial obligations and prove detrimental to profitability in the quarters ahead.
Forex Woes: With SWK’s operations spread globally, its business is exposed to risks arising from geopolitical issues, adverse movement in foreign currencies and governmental policies. In the first quarter of 2025, foreign currency translation had a negative impact of 2% on the company’s revenues.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for Stanley Black’s 2025 earnings has trended down from $5.14 per share to $4.36 on seven downward estimate revisions against none upward. The consensus estimate for 2026 earnings decreased from $6.37 per share to $5.49 on six downward estimate revisions versus none upward.
KALU delivered a trailing four-quarter average earnings surprise of 22.1%. In the past 60 days, the consensus estimate for Kaiser Aluminum’s 2025 earnings has increased 35.4%.
Tetra Tech (TTEK - Free Report) currently carries a Zacks Rank #2 (Buy). TTEK delivered a trailing four-quarter average earnings surprise of 3.8%. In the past 60 days, the Zacks Consensus Estimate for Tetra Tech’s fiscal 2025 earnings has increased 7.3%.
AptarGroup, Inc. (ATR - Free Report) presently carries a Zacks Rank of 2. ATR delivered a trailing four-quarter average earnings surprise of 7.3%. In the past 60 days, the consensus estimate for AptarGroup’s 2025 earnings has increased 5.4%.
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Reasons Why You Should Avoid Betting on Stanley Black Stock Right Now
Key Takeaways
Stanley Black & Decker, Inc. (SWK - Free Report) has failed to impress investors with its recent operational performance due to weakness across its businesses, high debt and operational expenses.
Based in New Britain, CT, Stanley Black is engaged in designing, manufacturing and marketing tools (power and hand tools), engineered fastening systems, outdoor products and related accessories. On a geographical basis, the company has operations in the United States (61.9% of 2024 net revenues), Canada (4.8%), other Americas (5.7%), Europe (19.6%) and Asia (8%).
Let’s discuss the factors that continue taking a toll on the firm.
Factors Affecting Stanley Black
Business Weakness: Softness in the Engineered Fastening segment remains a major concern. Stanley Black is witnessing persistent weakness in the automotive end market, owing to headwinds in the automotive OEM light vehicle production and constrained capex spending. Also, the divestiture of the infrastructure business has been impacting the segment’s sales. Revenues from the Engineered Fastening segment in first-quarter 2025 declined 20.7% year over year to $463.7 million. However, strength across the aerospace and general industrial markets has been acting as a tailwind.
High Costs & Expenses: The company is dealing with escalating expenses as management has stepped up investments in innovation and growth initiatives. In the first quarter, its SG&A expenses increased 1.8% year over year to $867 million. The metric, as a percentage of net sales, increased 120 bps to reach 23.2%. Also, the company’s cost of sales, as a percentage of net sales, was up 130 bps to 29.9%. We don’t see the SG&A hit to profitability mitigating recently and a few basis points (as a percentage of total revenues) increase is expected in 2025.
SWK Stock’s Price Performance
Image Source: Zacks Investment Research
Year to date, the Zacks Rank #5 (Strong Sell) company has lost 15.1% against the industry’s 0.7% growth.
High Debt Level: Exiting first-quarter 2025, the company’s long-term debt remained high at $4.8 billion. Its current maturities of long-term debt totaled $849.4 million. Considering its debt level, its cash and cash equivalents of $344.8 million do not look impressive. High debt levels can increase financial obligations and prove detrimental to profitability in the quarters ahead.
Forex Woes: With SWK’s operations spread globally, its business is exposed to risks arising from geopolitical issues, adverse movement in foreign currencies and governmental policies. In the first quarter of 2025, foreign currency translation had a negative impact of 2% on the company’s revenues.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for Stanley Black’s 2025 earnings has trended down from $5.14 per share to $4.36 on seven downward estimate revisions against none upward. The consensus estimate for 2026 earnings decreased from $6.37 per share to $5.49 on six downward estimate revisions versus none upward.
Stocks to Consider
Some better-ranked stocks are discussed below.
Kaiser Aluminum (KALU - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KALU delivered a trailing four-quarter average earnings surprise of 22.1%. In the past 60 days, the consensus estimate for Kaiser Aluminum’s 2025 earnings has increased 35.4%.
Tetra Tech (TTEK - Free Report) currently carries a Zacks Rank #2 (Buy). TTEK delivered a trailing four-quarter average earnings surprise of 3.8%. In the past 60 days, the Zacks Consensus Estimate for Tetra Tech’s fiscal 2025 earnings has increased 7.3%.
AptarGroup, Inc. (ATR - Free Report) presently carries a Zacks Rank of 2. ATR delivered a trailing four-quarter average earnings surprise of 7.3%. In the past 60 days, the consensus estimate for AptarGroup’s 2025 earnings has increased 5.4%.