3Q17 revenue expectations
Stanley Black & Decker (SWK) is set to announce its 3Q17 earnings on October 24, 2017, before the market opens. In this series, we’ll look at SWK’s revenue and earnings expectations and analyze the latest analyst recommendations and target prices.
As of October 18, 2017, analysts are expecting SWK to post revenues of $3.2 billion in 3Q17, a rise of 9.4% on a YoY (year-over-year) basis. In 3Q16, it reported revenues of $2.9 billion. If SWK meets analysts’ revenue expectations, it would be its third consecutive quarter of record revenues. Since 2012, its revenues have remained flat at $2.8 billion–$2.9 billion.
Acquisitions to drive revenue
The expected increase in SWK’s revenue is primarily due to the acquisition of the Newell Brands tool business. SWK entered into an acquisition agreement in October 2016 to buy the company for ~$2.0 billion in cash. The deal, which was completed on March 10, 2017, included the Irwin and Lenox brands. In another deal, SWK acquired the Craftsman brand from Sears Holdings (SHLD). The brand had reported annual sales of $200.0 million. These two acquisitions along with strong organic growth could provide a favorable 3Q17.
SWK has also completed the sale of a majority of its Mechanical Security business to Dormakaba. The sale included the commercial hardware brands BEST Access, phi Precision, and GMT with an annual revenue of approximately $270.0 million.
Investors looking for exposure to SWK can indirectly invest in the PowerShares DWA Consumer Staples Momentum ETF (PSL), which has invested 3.4% of its portfolio in Stanley Black & Decker. The fund also provides exposure to Constellation Brands (STZ) and United Rentals (URI) with weights of 5.1% and 3.9%, respectively.