Stanley Black (SWK) to Post Q3 Earnings: Is a Beat in Store?

Stanley Black & Decker, Inc. SWK is slated to report third-quarter 2020 results on Oct 27, before market open.

The company delivered better-than-expected results in the last four quarters, with an earnings surprise of 9.64%, on average. Notably, its second-quarter 2020 earnings of $1.60 per share surpassed the Zacks Consensus Estimate of $1.27.

In the past three months, shares of the company gained 16.4% compared with the industry’s growth of 14.7%.


Let us delve deeper.

Key Factors & Estimates for Q3

The impacts of improved operating conditions for manufacturing companies in the third quarter — evident from a 39.8% year-over-year increase in industrial production in the U.S. and a rise of ISM Purchasing Managers' Index from 52.6% in June to 55.4% in September — are expected to get reflected in Stanley Black’s results.

Apart from this, increasing preference for products related to safety and health, and do-it-yourself applications as well as any growth investments in Tools & Storage, and Security segments are likely to have aided the company’s top line in the third quarter. Also, a focus on product innovation and a surge in business from the e-commerce platform are expected to have been tailwinds.

Acquisitions too have been benefiting the company over time, with contributions of 2% in both the second quarter and the first quarter. This trend might have continued in the third quarter as well. On the flip side, the lingering impacts of the pandemic-led adversities are anticipated to have hurt results.

The Zacks Consensus Estimate for revenues in the third quarter is pegged at $3,922 million, suggesting a 8% increase from the year-ago quarter’s reported number and 24.6% growth from the last reported quarter.

For the Security segment, the Zack Consensus Estimate for third-quarter sales is pegged at $442 million, indicating a 5.2% decrease from the year-ago reported figure and 2.1% growth sequentially. Further, sales estimates for the Tools & Storage segment are pegged at $2,924 million. This suggests growth of 15.4% from the year-ago reported number and a 33.1% increase from the previous quarter’s reported figure.

In addition, the company’s cost-saving measures, including those taken in April 2020 and October 2019, are expected to have yielded benefits and aided margins. However, a trend of adverse impacts of forex woes and tariffs are anticipated to get reflected in third-quarter results. Also, high debts have been concerning.

The Zack Consensus Estimate for the company’s third-quarter earnings is pegged at $2.67, indicating an increase of 25.3% from the year-ago reported figure and 66.9% from the previous quarter.

Earnings Whispers

Our proven model suggests an earnings beat for Stanley Black this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The case with Stanley Black & Decker is shown below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Stanley Black has an Earnings ESP of +3.28%, with the Most Accurate Estimate of $2.76 above the Zacks Consensus Estimate of $2.67.

Stanley Black Decker, Inc. Price, Consensus and EPS Surprise


Stanley Black  Decker, Inc. Price, Consensus and EPS Surprise

Stanley Black Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black Decker, Inc. Quote

Zacks Rank: The company currently sports a Zacks Rank #2.

Other Stocks to Consider

Here are some other companies in the Zacks Industrial Products sector that you may want to consider as according to our model these too have the right combination of elements to post an earnings beat this quarter.

Fortune Brands Home & Security, Inc. FBHS currently has an Earnings ESP of +2.97% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regal Beloit Corporation RBC presently has an Earnings ESP of +3.24% and a Zacks Rank of 2.

Flowserve Corporation FLS currently has an Earnings ESP of +2.56% and a Zacks Rank #2.

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