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SWK Down By 15.1% in 2018 So Far – Can it Recover?

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Stanley Black & Decker stock performance in 2018

Stanley Black & Decker’s (SWK) stock has been struggling so far in 2018. On a year-to-date basis, the stock has left investors poorer by 15.1%. Its other industrial peers, Dover (DOV), Illinois Tool Works (ITW) and 3M (MMM) are also in red and have declined by 3.4%, 12.6%, and 15.6% respectively.

Stanley Black & Decker reported strong first-quarter earnings. It reported sales of $3.2 billion, an increase of 12% over previous year. SWK reported adjusted earnings per share of $1.39 which is up by 7% over previous year. However, the outlook of FY 18 earnings was the spoilsport. SWK expects its GAAP EPs to be in the range of $7.40-$7.60 as against the earlier guidance of $7.80 to $8.0. Also, the increase in the raw material prices resulted in margin decline. Also, the proposed tariff by China also had an adverse impact. As a result, the stock prices declined.

On the other hand, the completion of the Nelson Fastener Systems could help its revenue and earnings growth. Further, the restructuring activities are expected to benefit SWK by $19 million by the end of 2019. Strong second-quarter earnings could help the stock to recover its lost ground.

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Moving averages and RSI

The decline in stock price has resulted in stock trading 7.3% below the 100-day moving average price of $155.34 indicating the prevailing weakness in the stock. However, the 14-day relative strength index of 47 suggests that the stock is neither overbought nor oversold.

Investors can indirectly hold SWK by investing in iShares U.S. Consumer Goods ETF (IYK) that has invested 1.10% of its portfolio in SWK as of May 30, 2018.

 

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