We recently reiterated our recommendation on industrial tool maker, Stanley Black & Decker Inc. (SWK) at Neutral.
Why Neutral?
Stanley Black & Decker failed in igniting much spark from its first quarter 2013 financial results reported on Apr 25, 2013. Earnings per share estimates for the company have been revised downwards since the earnings release and the Zacks Consensus Estimate in the last 30 days dipped 0.7% to $5.46 for 2013 and 1.3% to $6.31 for 2014.
Future growth prospects for Stanley Black & Decker have been largely influenced by concerns arising from weak security and industrial markets in the U.S, difficult operating conditions in Europe, and headwinds from higher interest and tax rates.
If we leave aside these near-term concerns, Stanley Black & Decker seems well positioned as a major player in the machine tools and accessories industry having solid long-term growth prospects. The company is well equipped to leverage benefits from the increase in industrial tools demand globally as well as from the rising exposure to emerging markets.
Also, we see the company’s strategic initiatives place it well for growth. Acquisitions carried out in the past have proved to be very advantageous. Among the many purchases made so far, mention may be made of Black & Decker and Niscayah in 2011 and Infastech in Feb 2013. Besides acquisitions, divestment of non-core assets has helped Stanley Black & Decker utilize the free resources in a meaningful way. Divestment of Hardware & Home Improvement Group (HHI) in Dec 2012 fetched the company $1.3 billion in after-tax proceeds, which the company intends to utilize for share buybacks, dividend payments or acquisitions.
Considering all these, we prefer remaining on the sidelines for Stanley Black & Decker currently.
Other Stocks in the Industry
Stocks that closely compete with Stanley Black & Decker are Lincoln Electric Holdings Inc. (LECO), with a Zacks Rank #1 (Strong Buy), Actuant Corporation (ATU) and Kennametal Inc. (KMT).
ACTUANT CORP (ATU): Free Stock Analysis Report
KENNAMETAL INC (KMT): Free Stock Analysis Report
LINCOLN ELECTRC (LECO): Free Stock Analysis Report
STANLEY B&D INC (SWK): Free Stock Analysis Report
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