We have issued an updated research report on Stanley Black & Decker, Inc. (SWK - Free Report) on Apr 1.
This industrial tool maker currently carries a Zacks Rank #4 (Sell). The company’s market capitalization is approximately $20.6 billion.
Let’s delve deeper and discuss what led to the company’s poor investment appeal.
Share Price Performance & Poor Valuation: Market sentiments have been against Stanley Black & Decker for quite some time now. The company’s stock price has lost roughly 9.4% in the past year compared with the industry’s decline of 8.2%.
Also, the stock appears overvalued compared with the industry. On a P/E (TTM) basis, the company’s shares are currently trading at 16.7x compared with the industry’s 16.3x.
Earnings Estimate Revision: Stanley Black & Decker reported in-line results for the fourth quarter of 2018. Its earnings in the quarter declined 3.2% year over year due to higher costs of sales, interest expenses and tax expenses.
Earnings in 2019 will face headwinds from multiple sources (few discussed here and few in the points below). The company presumes tax rate of 17.5% to adversely impact the bottom line by 15 cents per share. The company expects earnings per share in the first quarter to be roughly 13% of 2019 guidance, with the percentage reflecting a year-over-year decline of 400 basis points (bps).
Also, earnings estimates for the company have been lowered in the past 60 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $8.53 for 2019 and $9.43 for 2020, reflecting declines of 0.4% and 0.7%, respectively.
Stanley Black & Decker, Inc. Price and Consensus