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Here's Why Hold Strategy is Apt for Stanley Black & Decker Stock Now
SWKStanley Black & Decker(SWK) ZACKS·2025-01-09 17:16

Cost Reduction and Margin Improvement - The company's cost-reduction program, initiated in mid-2022, has generated approximately 1.4billioninpre−taxrun−ratesavingsandreducedinventorybyover1.4 billion in pre-tax run-rate savings and reduced inventory by over 2 billion [1][2] - The program aims to achieve 2billioninpre−taxrun−ratesavingsbytheendoftheyear,withalong−termadjustedgrossmargintargetofover352 billion in pre-tax run-rate savings by the end of the year, with a long-term adjusted gross margin target of over 35% [2] Divestment and Debt Reduction - The company divested its STANLEY Infrastructure business for 760 million in April 2024 to focus on core operations and reduce debt [3] - This divestment supports the company's capital-allocation priorities and debt reduction efforts [3] Shareholder Rewards - The company allocated 367.2millionfordividendpayoutsinthefirstninemonthsof2024,reflectinga1.8367.2 million for dividend payouts in the first nine months of 2024, reflecting a 1.8% year-over-year increase [4] - The quarterly dividend was increased by 1 cent to 82 cents per share in July 2024 [4] Market Challenges - The company faces lower demand in the consumer outdoor and do-it-yourself markets, particularly in the power tools business due to industrial sector slowdowns [5] - The automotive end market is weakening, driven by challenges in global automotive OEM light vehicle production [5] Financial Performance and Debt Concerns - The company's shares declined by 5% in the past month, compared to the industry's 7.8% decline [7] - Long-term debt stood at 5.6 billion at the end of Q3 2024, with current maturities of 500.2millionandcashequivalentsof500.2 million and cash equivalents of 298.7 million, lower than short-term borrowings of $387.4 million [7] Industry Stock Picks - Generac Holdings (GNRC) has a Zacks Rank of 1 (Strong Buy) with a trailing four-quarter average earnings surprise of 10.8% and a 0.6% increase in 2024 earnings consensus estimates over the past 60 days [8] - Alarm.com Holdings (ALRM) holds a Zacks Rank of 2 (Buy) with a trailing four-quarter average earnings surprise of 19.6% and a 7.2% increase in 2024 earnings consensus estimates over the past 60 days [10] - Applied Industrial Technologies (AIT) carries a Zacks Rank of 2 with a trailing four-quarter average earnings surprise of 5% and a 0.2% increase in 2024 earnings consensus estimates over the past 60 days [10]