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Stanley Black & Decker: Record Q4 Revenues?

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Stanley Black & Decker’s revenue estimates

Stanley Black & Decker (SWK) is expected to report revenues of $3.62 billion in the fourth quarter, which represents a ~6.2% increase from $3.41 billion in the fourth quarter of 2017. If Stanley Black & Decker manages to meet the expectations, it would achieve its highest fourth-quarter revenue ever and see the first fourth-quarter CAGR (compound annual growth rate) of ~5.0% since 2014.

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Driving factors

The projected revenue growth is expected to be driven mainly by organic growth. Apart from the organic growth, Stanley Black & Decker’s revenues will have contributions from the acquisitions of the Craftsman Brand from Sears Holdings and Newell Brands’ tools business. In 2018, Stanley Black & Decker also acquired a 20% stake in MTD Products for $234 million. The company acquired IES’s attachments business for $690 million. However, the contribution from these acquisitions will be visible in 2019. Stanley Black & Decker also partnered with Home Depot (HD), which will be the exclusive home improvement retailer for Stanley hand tools and storage product portfolio. All of the reporting segments are expected to post revenue growth.

Stanley Black & Decker might face challenges due to the strong dollar, which could have a negative impact on its revenues. The US Dollar Index, which measures the dollar’s movement against the basket of currencies, gained ~1.8% on July 1–December 31.

Investors looking for indirect exposure to Stanley Black & Decker could invest in the PowerShares DWA Consumer Staples Momentum ETF (PSL), which has invested 3.9% of its portfolio in Stanley Black & Decker. The fund also provides exposure to Rollins (ROL) and Church & Dwight (CHD), which have weights of 4.9% and 4.5%, respectively, as of January 17.

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