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.
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.
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.