We recently upgraded our recommendation on
Stanley Black & Decker, Inc.
) from Underperform to Neutral.
Why the Upgrade?
The upward revision on Stanley Black & Decker's
recommendation followed the Dec 12 announcement of the company's
financial outlook for 2014. Earnings per share, excluding
one-time charges, are predicted at $5.30-$5.50, up 9.1% year over
year at midpoint.
Organic revenue growth is expected at 4% versus 3% projected for
2013. Security margin improvement, cost reductions in the
segments and synergies from the Infastech acquisition were
positive drivers while unfavourable impacts from foreign currency
translation, higher tax rate and interest expenses subdued the
Stanley Black & Decker also intends to use its free cash flow
for acquisitions, reducing debt levels and rewarding shareholders
before returning to its 50/50 allocation strategy post 2015.
We believe the industrial tool maker has solid long-term growth
prospects and seems well positioned to benefit from the increase
in industrial tools demand globally and its rising exposure to
emerging markets. Year to date, the company has provided a return
Other Stocks in the Industry
Stanley Black & Decker currently has a $12.5 billion market
capitalization and carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry include
Flow International Corporation
Lincoln Electric Holdings Inc.
). While NN Inc holds a Zacks Rank #1 (Strong Buy), both Flow
International and Lincoln Electric carry a Zacks Rank #2 (Buy).
FLOW INTL CORP (FLOW): Free Stock Analysis
LINCOLN ELECTRC (LECO): Free Stock Analysis
NN INC (NNBR): Free Stock Analysis Report
STANLEY B&D INC (SWK): Free Stock Analysis
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