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Valued at a market cap of $12.1 billion, Stanley Black & Decker, Inc. (SWK) provides hand tools, power tools, outdoor products, and related accessories. The New Britain, Connecticut-based company designs, manufactures, and markets products under well-known brands like DEWALT, Craftsman, Stanley, and Black+Decker.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and SWK fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the tools & accessories industry. The company maintains a strong global presence, leveraging its innovation-driven approach to develop smart, connected tools and sustainable solutions. Additionally, its expertise extends to industrial fastening systems and security solutions, serving critical industries like automotive, aerospace, and construction.
Despite its notable strength, this industrial tools manufacturer has dipped 29.9% from its 52-week high of $110.88, reached on Sep. 27, 2024. Moreover, it has declined 3.6% over the past three months, lagging behind the broader Industrial Select Sector SPDR Fund’s (XLI) marginal dip over the same time frame.
In the longer term, SWK has fallen 19.9% over the past 52 weeks, considerably lagging behind XLI’s 5.5% return over the same time frame. Moreover, on a YTD basis, shares of SWK are down 3.2%, compared to XLI’s marginal gains.
To confirm its bearish trend, SWK has been trading below its 200-day moving average since early November, 2024, and has remained below its 50-day moving average since early March.
On Feb. 5, shares of SWK plunged 1.2% after its Q4 earnings release despite delivering way better-than-expected Q4 adjusted EPS of $1.49 and revenue of $3.7 billion. Additionally, its adjusted gross margin improved by 140 basis points annually, driven by the company’s global cost reduction program, which delivered $110 million in incremental pre-tax run-rate cost savings. This efficiency boost contributed to a net income of $194.9 million, a significant turnaround from the $304.4 million loss recorded in the prior-year quarter.
However, its net sales reduced marginally year-over-year due to lower industrial segment revenue, which was impacted by the infrastructure business divestiture and lower volumes. This might have dampened investor confidence. Adding to the downtick, its engineered fastening organic revenues remained flat, as aerospace and general industrial growth was offset by automotive market softness.
SWK’s underperformance looks even more pronounced when compared to its rival, Snap-on Incorporated’s (SNA) 12.9% gain over the past 52 weeks and 1.2% decline on a YTD basis.
Despite SWK’s recent underperformance relative to its broader sector, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 16 analysts covering it, and the mean price target of $99.33 suggests a 27.8% premium to its current levels.
