Zacks Investment Research downgraded
Stanley Black & Decker Inc.
) to a Zacks Rank #5 (Strong Sell) on Nov 19, 2013.
Why the Downgrade?
Despite sound financial performance in the third quarter 2013,
Stanley Black & Decker failed to create much confidence about
its growth prospects for the rest of 2013 and for 2014. Let us
first have a look at the company's performance in the third
Earnings per share grew 13.9% year over year to $1.39 and
surpassed the Zacks Consensus Estimate by a cent. Revenue
increased 9.6% primarily on the back of volume gains and
contributions from acquisitions. Growth in emerging markets as
well as margin recovery in Security segment was below
Management of Stanley Black & Decker is concerned about the
security business that is likely to remain weak in Europe in
2013, offsetting slight gains expected from the U.S. housing
market related recovery. Besides, continued weakness in the
emerging markets is anticipated to pull down growth rates in the
Industrial and CDIY segments. Further, the US government shutdown
in October will impact the company's organic growth.
Accounting for all these, the earnings per share guidance has
been lowered from $5.40-$5.65 to $4.90-$5.00; organic revenue
growth rate now stands at 3% versus 4%-5% expected earlier, and
free cash flow guidance has been lowered to $800 million.
The disappointing guidance induced downward revision in earnings
estimates for Stanley Black & Decker. In the last 60 days,
the Zacks Consensus Estimate for the company has gone down by
8.4% to $4.99 for 2013 and declined by 13.1% to $5.50 for 2014.
Also, we have an
of -1.27% for 2014.
Other Stocks to Consider
Stanley Black & Decker currently has $12.7 billion market
capitalization. However, companies to watch out for in the
), each with a Zacks Rank #1 (Strong Buy) and
Norsk Hydro ASA
), with a Zacks Rank #2 (Buy).
NORSK HYDRO ADR (NHYDY): Get Free Report
NN INC (NNBR): Free Stock Analysis Report
NSK LTD -UN ADR (NPSKY): Get Free Report
STANLEY B&D INC (SWK): Free Stock Analysis
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