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Stanley Black & Decker Shares Roar on Spectacular 2Q16 Performance

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Stanley Black & Decker declares earnings for 2Q16

Stanley Black & Decker (SWK), the world’s leading toolmaker, declared its 2Q16 earnings before the Market opened on July 22, 2016. SWK stock closed 4.8% higher on the day of the earnings release.

In 2Q16, Stanley Black & Decker’s adjusted earnings per share (or EPS) increased by 19.5% to $1.84 against estimates of $1.72. Its EPS growth was led by stellar organic growth in key segments such as Tools & Storage and Security, which constitute 84% of the company’s sales.

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Commodity deflation kept raw material prices in check and, consequently, its gross margins at their highest levels for at least the last ten quarters. The company’s operating margins of 15.8% in 2Q16 is a record since its merger with Black & Decker in 2009. All in all, SWK’s 2Q16 operating performance was impressive.

Competitor performance

Stanley Black & Decker’s major US competitor in the tools business, Snap-on (SNA), declared its earnings on July 21. Snap-on reported adjusted earnings per share of $2.36, a growth of 16.3% over the last year, eclipsing its consensus earnings estimate by $0.13.

However, SNA missed its consensus estimate on sales by ~$4.5 million after reporting revenues of $872.3 million. Snap-on benefited from positive trends in the construction industry (ITB), which led to higher tool sales and commodity deflation and then to lower costs.

The slow-moving industrials (RGI) sector affected Snap-on’s Commercials and Industrials segment, where sales fell by 3.4%. SNA’s stock was down by 3.4% at market closing on July 21.

Stanley Black & Decker’s performance in terms of sales was better compared to Snap-on. Tyco International (TYC), SWK’s major competitor in the securities business, is slated to release its 3Q16 earnings on July 29.

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