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Stanley Black (SWK) Hikes Q2 Organic Sales View, Stock Up

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Stanley Black & Decker, Inc. (SWK - Free Report) yesterday provided an update on its second-quarter revenues, while taking part in JPMorgan Homebuilding & Building Products conference.

The indication of a rise in the expectation for second-quarter revenues has lifted sentiments for the stock, as is evident from a 1% increase in the company’s share price. The closing trade price for the stock was $121.89 yesterday.

Inside the Headlines

Stanley Black noted that its shipments fell just 25% in the first seven weeks of second-quarter 2020. This reflects an improvement from a 40% decline in shipments in the first four weeks of the quarter.

It mentioned that retail POS in North America strengthened through the first seven weeks of the second quarter. Also, the security business has performed well so far in the second quarter, having declined less than what was experienced in the first four weeks.

Considering the above-mentioned improvements, the company now expects an organic sales decline of 20-30% for the second quarter. This marks an improvement from a 35-45% decline anticipated earlier (communicated on Apr 30).

Also, the company reiterated that the safety of its supply-chain partners and workers along with the continuity of businesses remains the top priority now. It further added that it is poised to benefit from favorable e-commerce trends, the popularity of Craftsman products and rollout of products.

Further, it mentioned that cost-reduction measures announced in April 2020 include four categories — indirect costs, compensation areas, benefits and deflation. The cost-saving actions are expected to yield annualized savings of $1 billion.

For the second quarter of 2020, the Zacks Consensus Estimate for earnings is pegged at 11 cents, reflecting a decline of 94.2% from the 30-day-ago figure. The consensus estimate for revenues is pegged at $2.34 billion, suggesting a decline of 37.8% from the year-ago reported figure.

Zacks Rank, Earnings Estimates and Price Performance

Stanley Black, with a market capitalization of $18.6 billion, currently carries a Zacks Rank #5 (Strong Sell). The company is exposed to the adverse impacts of the pandemic. Also, it withdrew projections for 2020. Further, the company faces risks from forex woes and tariffs.

In the past three months, Stanley Black’s shares have moved down 22.9% compared with the industry’s decline of 21.2%.






Also, a decline in earnings estimates reflects bearish sentiments for the company’s prospects. The Zacks Consensus Estimate for its earnings is pegged at $5.03 for 2020 and $6.75 for 2021, reflecting declines of 35.2% and 25% from the respective 30-day-ago figures.

Stanley Black Decker, Inc. Price and Consensus

 

Stanley Black  Decker, Inc. Price and Consensus

Stanley Black Decker, Inc. price-consensus-chart | Stanley Black Decker, Inc. Quote

Stocks to Consider

Some better-ranked stocks in the Zacks Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , II-VI Incorporated (IIVI - Free Report) and Broadwind Energy, Inc. (BWEN - Free Report) . While both Silgan and II-VI currently sport a Zacks Rank #1 (Strong Buy), Broadwind Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 30 days, earnings estimates for Silgan and II-VI have improved for the current year, while have been unchanged for Broadwind Energy. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 213.33% for II-VI and 200% for Broadwind Energy.

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