Stanley Black & Decker, Inc. (SWK Quick QuoteSWK - Free Report) is slated to report third-quarter 2018 results on Oct 25, before the market opens.

This industrial tool maker delivered better-than-expected results in the last four quarters. Average earnings surprise was a positive 8.93%. Notably, the company’s earnings of $2.57 were above the Zacks Consensus Estimate of $2.03.

In the last three months, the company’s shares declined 15.9%, worse than 13.1% fall recorded by the industry it belongs to.



Let us see how things are shaping up for Stanley Black & Decker this quarter.

Factors Likely to Drive Q3 Results

In the United States, operating environment for industrial product manufacturers and service providers currently seems to be favorable. Rising industrial production in the country — evident from 2.8% year-over-year growth registered in January to 5.1% growth in September — and healthy demand for U.S.-manufactured machinery will prove advantageous for industrial products manufacturers.

In addition, use of technologically advanced machinery and equipment in manufacturing processes generally tends to keep demand strong for industrial products. Tax policy changes implemented in last December, strengthening housing starts, infrastructural developments and availability of higher-wage jobs are other tailwinds.

For Stanley Black & Decker, increasing exposure in emerging markets, favorable e-commerce trends and growing popularity of products like Craftsman, Lenox, Irwin, and DeWalt FlexVolt will be beneficial. Further, acquired assets of Newell Tools, Craftsman, Nelson Fastener Systems and IES Attachments have been boosting its segmental business. Further, the company will soon acquire 20% interest in MTD Products, marking its entry into the global garden and lawn market.

For the third quarter of 2018, Stanley Black & Decker anticipates earnings to be 24% of 2018 projection of $8.30-$8.50 per share. The full-year guidance reflects growth of 11-14% from the previous year. It’s worth mentioning here that growth in organic volumes, productivity enhancement and cost-saving actions, along with favorable pricing and share buybacks, will boost the bottom line for the year.

For Tools & Storage segment, Stanley Black & Decker anticipates organic revenues to grow in a high-single digit. The Zacks Consensus Estimate for revenues for the third quarter of 2018 has increased 10.2% year over year to $2,555 million. Further, average sales surprise of +4.15% is encouraging.

For Industrial and Security segments, the company predicts organic revenues to remain relatively flat year over year. The Zacks Consensus Estimate for revenues for the Industrial and Security segments are pegged at $543 million and $487 million, respectively. Estimates reflect year-over-year growth of 7.7% for Industrial and 2.1% for Security segment.

On the other hand, the company believes that inflation in commodity costs will have an adverse impact of $205 million on 2018 results. Further, tariffs woes — related to Section 232 and Section 301 — will impact results by $35 million. Foreign currency translation will adversely impact results by 40 cents per share.

Earnings Whispers

Our proven model provides some idea on stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Stanley Black & Decker has been provided below.

Earnings ESP: Stanley Black & Decker has an ESP of -0.25%. The Zacks Consensus Estimate for the quarter is $2.02.

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise