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Stanley Black (SWK) Shares Down 12% in 6 Months: Here's Why
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Stanley Black & Decker (SWK - Free Report) is grappling with reduced retail and consumer demand, supply-chain disruptions and foreign currency headwinds, primarily due to which its shares have declined 12.2% in the past six months, underperforming the industry’s 0.8% increase in the period.
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Reduced retail and consumer demand and the resultant softness in volumes are a drag on the Tools & Outdoor segment’s performance. Within the segment, the Power Tools division is experiencing weakness (revenues down 5% organically in 2022) due to reduced consumer spending as a result of an increase in interest rates. For 2023, SWK expects segmental organic revenues to decline in the low single digits with an approximately 5% decrease in volumes.
Supply-chain restrictions, primarily semiconductor constraints, and logistics and input cost increases weighed on Stanley Black’s operations in 2022. Despite improvement in supply-chain constraints and an anticipated reduction in raw material costs in 2023 (due to deceleration in inflation), the persistence of these headwinds poses a threat to the bottom-line performance.
Given Stanley Black’s substantial international presence, foreign currency headwinds have been a major challenge. In fourth-quarter 2022, foreign currency translation had a negative impact of 3% on sales.
For 2023, Stanley Black expects a soft demand environment compared to that experienced last year. The company anticipates a decline in volumes compared to last year, with an expected decrease in new housing starts and remodel activity. SWK expects organic growth to decline in the low single digits in the year. For 2023, the company expects adjusted earnings per share in the range of 0-$2. In 2022, it reported adjusted earnings (from continuing operations) of $4.62 per share.
Zacks Rank & Key Picks
Stanley Black & Decker currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Allegion has an estimated earnings growth rate of 5.2% and 12.1% for 2022 and 2023, respectively. The stock has gained 11.8% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
Valmont Industries has an estimated earnings growth rate of 26.7% and 13.7% for 2022 and 2023, respectively. The stock has rallied 12.4% in the past six months.
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Stanley Black (SWK) Shares Down 12% in 6 Months: Here's Why
Stanley Black & Decker (SWK - Free Report) is grappling with reduced retail and consumer demand, supply-chain disruptions and foreign currency headwinds, primarily due to which its shares have declined 12.2% in the past six months, underperforming the industry’s 0.8% increase in the period.
Image Source: Zacks Investment Research
Reduced retail and consumer demand and the resultant softness in volumes are a drag on the Tools & Outdoor segment’s performance. Within the segment, the Power Tools division is experiencing weakness (revenues down 5% organically in 2022) due to reduced consumer spending as a result of an increase in interest rates. For 2023, SWK expects segmental organic revenues to decline in the low single digits with an approximately 5% decrease in volumes.
Supply-chain restrictions, primarily semiconductor constraints, and logistics and input cost increases weighed on Stanley Black’s operations in 2022. Despite improvement in supply-chain constraints and an anticipated reduction in raw material costs in 2023 (due to deceleration in inflation), the persistence of these headwinds poses a threat to the bottom-line performance.
Given Stanley Black’s substantial international presence, foreign currency headwinds have been a major challenge. In fourth-quarter 2022, foreign currency translation had a negative impact of 3% on sales.
For 2023, Stanley Black expects a soft demand environment compared to that experienced last year. The company anticipates a decline in volumes compared to last year, with an expected decrease in new housing starts and remodel activity. SWK expects organic growth to decline in the low single digits in the year. For 2023, the company expects adjusted earnings per share in the range of 0-$2. In 2022, it reported adjusted earnings (from continuing operations) of $4.62 per share.
Zacks Rank & Key Picks
Stanley Black & Decker currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE pulled off a trailing four-quarter earnings surprise of 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
Allegion has an estimated earnings growth rate of 5.2% and 12.1% for 2022 and 2023, respectively. The stock has gained 11.8% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
Valmont Industries has an estimated earnings growth rate of 26.7% and 13.7% for 2022 and 2023, respectively. The stock has rallied 12.4% in the past six months.