Stanley Black & Decker: Analysts Foresee Higher Adjusted Earnings



3Q17 adjusted EPS expectations

As of October 18, 2017, analysts are expecting Stanley Black & Decker (SWK) to post adjusted EPS (earnings per share) of $1.87 in 3Q17, an 11.2% rise on a YoY (year-over-year) basis. In 3Q16, it reported diluted EPS of $1.68.

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Driving factors

SWK’s expected increase in adjusted EPS could be driven by higher organic and acquisition revenues and better operational expenses. Analysts are expecting SWK’s 3Q17 COGS (cost of goods sold) to be ~$2.0 billion, representing 62.3% of expected sales. In 3Q16, it reported COGS of $1.8 billion, representing 62.5% of sales. That’s a fall of 20 basis points on a YoY basis.

Analysts also expect better SG&A (selling, general, and administrative) expenses. They’re projecting them to be $638.4 million, representing 20.3% of expected sales. SWK’s 3Q16 SG&A expenses were $645.4 million, representing 22.4% of sales, a fall of 210 basis points YoY.

Share repurchases

In 2Q17, SWK bought back 15,000 shares. At the end of 2Q17, it had the authorization to buy back 10.0 million shares. On a YoY basis, the outstanding number of shares is expected to be 152.1 million compared to 148.0 million in 3Q16. The increase in outstanding shares is attributed to a shares issuance in 4Q16. We’ll have to wait and see if SWK can initiate share repurchases in a big way in 3Q17.

Investors can hold SWK indirectly by investing in the iShares Edge MSCI Multifactor Industrials (INDF), which has invested 3.2% of its portfolio in Stanley Black & Decker. The other holdings of the fund include General Electric (GE), Boeing (BA), and 3M (MMM) with weights of 7.4%, 4.0%, and 3.7%, respectively, as of October 18, 2017.


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