Industrial tool maker, Stanley Black & Decker, Inc. SWK is scheduled to report first-quarter 2015 results on Apr 23 before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.07 per share.
Stanley Black & Decker performed well in the last four trailing quarters, with an average positive earnings surprise of 6.07%. In the last reported quarter, the company’s earnings of $1.56 per share surpassed the Zacks Consensus Estimate of $1.53 by 1.96%. Let us see how things are shaping up for this quarter.
Factors to Influence Q1 Results
Operating environment for the U.S.-based industrial tool makers, like Stanley Black & Decker, was difficult in first-quarter 2015. The country’s industrial production fell 1% over the year-ago quarter due primarily to weakness in the mining and utilities industries. Lower oil prices acted as a major headwind, limiting oil and gas well-drilling activities in the quarter. This resulted in weak demand for industries that directly or indirectly source businesses from the energy sector.
In addition, Stanley Black & Decker’s top-and bottom-line results are likely to be hurt by unfavorable foreign currency movements. For first-quarter 2015, the company anticipates foreign currency translation to adversely impact revenue growth by 4−5% and earnings by 70−75 cents per share. Also, rising cost of sales and interest expenses remain major concerns.
However, Stanley Black & Decker’s strategy of shifting its business portfolio toward better growth markets as well as its commitment to reward shareholders handsomely will work in its favor in the coming quarters.
Earnings Whispers
Our proven model does not conclusively show that Stanley Black & Decker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Expected Surprise Prediction or ESP for the stock is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.07.
Zacks Rank: Stanley Black & Decker carries a Zacks Rank #3 (Hold). This rank, when combined with 0.00% ESP, makes earnings surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks to Consider
Here are some companies you may want to consider in the machinery industry as our model shows they have the right combination of elements to post an earnings beat this quarter:
Deere & Company DE, with an Earnings ESP of +3.80% and a Zacks Rank #3.
Xylem Inc. XYL, with an Earnings ESP of +3.23% and a Zacks Rank #3.
Zebra Technologies Corporation ZBRA, with an Earnings ESP of +7.41% and a Zacks Rank #3.
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