Stanley Black & Decker, Inc. (SWK) | Investment Case

1. Company Snapshot

1.a. Company Description

Stanley Black & Decker, Inc.engages in the tools and storage and industrial businesses in the United States, Canada, rest of Americas, France, rest of Europe, and Asia.Its Tools & Storage segment offers professional products, including professional grade corded and cordless electric power tools and equipment, and pneumatic tools and fasteners; and consumer products, such as corded and cordless electric power tools primarily under the BLACK+DECKER brand, as well as corded and cordless lawn and garden products and related accessories; home products; and hand tools, power tool accessories, and storage products.

This segment sells its products through retailers, distributors, dealers, and a direct sales force to professional end users, distributors, dealers, retail consumers, and industrial customers in various industries.The company's Industrial segment provides engineered fastening systems and products to customers in the automotive, manufacturing, electronics, construction, aerospace, and other industries; sells and rents custom pipe handling, joint welding, and coating equipment for use in the construction of large and small diameter pipelines, as well as provides pipeline inspection services; and sells hydraulic tools and performance-driven heavy equipment attachment tools.This segment serves oil and natural gas pipeline industry and other industrial customers.

It also sells automatic doors to commercial customers.The company was formerly known as The Stanley Works and changed its name to Stanley Black & Decker, Inc.in March 2010.

Stanley Black & Decker, Inc.was founded in 1843 and is headquartered in New Britain, Connecticut.

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1.b. Last Insights on SWK

Stanley Black & Decker's recent performance was driven by its Q4 earnings beat, with adjusted earnings per share of $1.41 surpassing estimates. The company's margin expansion, with adjusted gross margin expanding 70 basis points to 30.7% for full-year 2025, was a positive highlight. Additionally, the company's cost-saving initiatives, aiming for $2B in savings, are expected to reshape its long-term outlook. The company's strategic growth and cost efficiency efforts are underway, with a focus on navigating challenges in its end markets.

1.c. Company Highlights

Last Price	91.96
Change Percentage	2.62%
Open	89.51
Previous Close	89.61
Market Cap ( Millions)	14243
Volume	2736606
Year High	93.37
Year Low	53.91
M A 50	80.99
M A 200	72.95

FCF Yield	4.83%
Dividend Yield	3.59%
ROE	4.47%
Debt / Equity	64.76%
Net Debt / EBIDTA	440.03%
Price To Book	1.54
Price Earnings Ratio	34.65
Price To FCF	20.71
Price To sales	0.94
EV / EBITDA	15.63

2. Strong FY2025 Results with Margin Expansion

The company delivered solid results in 2025, with total revenues of $15.1 billion, down about 1% organically. DEWALT and aerospace fasteners grew in low single digits and 25% respectively, contributing to the overall revenue. Adjusted gross margin expanded 70 basis points to 30.7% for full-year 2025, driven by tariff mitigation actions and supply chain transformation efficiencies. Adjusted EBITDA grew by 5%, and adjusted earnings per share grew 7% to $4.67. The company's commitment to disciplined execution and cost reduction programs led to $2.1 billion of run-rate pretax cost savings since the program's inception in mid-2022.

Publication Date: Feb -12

                                    📋 Highlights
                                    2025 Full-Year Revenue:
                                                $15.1 billion, with organic revenue down 1% and DEWALT growing in low single digits.
Gross Margin Expansion:
                                                Adjusted gross margin rose 70 bps to 30.7% in 2025, driven by tariff mitigation and cost savings of $2.1 billion.
2026 EPS Guidance:
                                                Adjusted EPS expected to reach $4.90–$5.70 (+13% at midpoint), supported by margin improvement and a half-year of CAM results.
2026–2027 Revenue Reductions:
                                                $120M–$140M in 2026 and $150M–$170M in 2027, offset by 150 bps gross margin expansion from tariff actions and operational shifts.
2026 Free Cash Flow:
                                                $700M–$900M target, reflecting strong cash flow conversion despite first-half headwinds from tariff costs and under-absorption.

                                

Segment Performance

The DEWALT brand successfully overcame broader headwinds and posted low single-digit organic growth for the full year, including organic growth across all product lines and regions. The engineered fastening segment delivered 3% organic revenue growth, driven by high single-digit organic revenue growth in the second half. The company's prioritized marketing activation and accelerated innovation initiatives underpinned the success in these segments.

Guidance and Outlook

For 2026, the company expects adjusted earnings per share to be in the range of $4.90 to $5.70, representing growth of 13% at the midpoint. Revenue is expected to grow in the low single digits year over year, with organic revenue also expected to grow at a similar rate. The company is targeting free cash flow generation of $700 million to $900 million for the year. As Christopher Nelson mentioned, "We're responding to our end users, buyers, and customers, making tweaks around the edges." The company is confident in its strategy and expects to see sales trends improve from new product launches and commercial initiatives.

Valuation and Metrics

With a P/E Ratio of 34.11 and an EV/EBITDA of 15.45, the company's valuation appears to be reasonable considering its growth prospects. The Dividend Yield of 3.65% and Free Cash Flow Yield of 4.91% also indicate a relatively attractive return profile. The actual EPS of $1.41 beat estimates of $1.27, indicating a positive surprise. Analysts estimate revenue growth at 2.0% for next year, which is lower than the company's guidance of low single-digit growth.

Margin Expansion and Tariff Mitigation

The company expects adjusted gross margin to expand by approximately 150 basis points year over year, supported by top-line expansion, price, ongoing tariff mitigation efforts, and continuous operational improvement. The company has already started actions to mitigate tariffs, including transferring production from China to North America and dual-qualifying SKUs. As Patrick Hallinan mentioned, "We're navigating the tariff jolt, but we're confident that our strategy will pay off."

3. NewsRoom

Stanley Black & Decker, Inc. (SWK) Presents at Barclays 43rd Annual Industrial Select Conference Transcript

Feb -18

Source: seekingalpha.com

U.S. Online Prices Post Largest Increase in 12 Years

Feb -16

Source: gurufocus.com

Stanley Black & Decker: This Dividend King Is Worth Holding After Q4 Results (Rating Downgrade)

Feb -15

Source: seekingalpha.com

Howmet Aerospace Reports Fourth Quarter and Full Year 2025 Results

Feb -12

Source: prnewswire.com

Stanley Black & Decker To Present At The Barclays 43rd Annual Industrial Select Conference

Feb -11

Source: prnewswire.com

Dividend Kings: No Ideal Buys In February's 57

Feb -10

Source: seekingalpha.com

Stanley Black & Decker (SWK) Just Reclaimed the 20-Day Moving Average

Feb -05

Source: zacks.com

Stanley Black & Decker Inc (SWK) Q4 2025 Earnings Call Highlights: Navigating Challenges with Strategic Growth and Cost Efficiency

Feb -04

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.69%)

6. Segments

Tools & Outdoor

Expected Growth: 3%

Stanley Black & Decker's Tools & Outdoor segment growth is driven by increasing demand for outdoor recreational activities, rising popularity of DIY projects, and strategic acquisitions expanding product offerings. Additionally, investments in e-commerce and digital marketing enhance customer engagement, contributing to a 3% growth rate.

Industrial

Expected Growth: 1%

Stanley Black & Decker's Industrial segment growth is driven by increasing demand for industrial tools and equipment, particularly in the automotive and aerospace industries. Additionally, the company's focus on innovation, digitalization, and strategic acquisitions has enabled it to expand its product offerings and strengthen its market position.

7. Detailed Products

Power Tools

A wide range of power tools including drills, saws, sanders, and more

Hand Tools

A variety of hand tools including wrenches, pliers, screwdrivers, and more

Storage Solutions

A range of storage solutions including tool chests, cabinets, and accessories

Engineered Fastening

A range of engineered fastening solutions including rivets, inserts, and more

Infrastructure

A range of infrastructure solutions including security systems, access control, and more

Oil and Gas

A range of solutions for the oil and gas industry including drilling, extraction, and more

8. Stanley Black & Decker, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Stanley Black & Decker, Inc. faces moderate threat from substitutes due to the availability of alternative products from competitors.

Bargaining Power Of Customers

Stanley Black & Decker, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Stanley Black & Decker, Inc. has a moderate dependence on suppliers, which can impact its production and pricing.

Threat Of New Entrants

Stanley Black & Decker, Inc. operates in a capital-intensive industry, which creates a barrier to entry for new entrants.

Intensity Of Rivalry

Stanley Black & Decker, Inc. operates in a highly competitive industry, which leads to intense rivalry among existing players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	44.65%
Debt Cost	9.60%
Equity Weight	55.35%
Equity Cost	10.54%
WACC	10.12%
Leverage	80.66%

11. Quality Control: Stanley Black & Decker, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Snap-on

A-Score: 6.3/10

Value: 4.3

Growth: 6.0

Quality: 8.2

Yield: 6.0

Momentum: 4.5

Volatility: 9.0

1-Year Total Return ->

Timken

A-Score: 5.5/10

Value: 5.8

Growth: 5.0

Quality: 5.2

Yield: 4.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

RBC Bearings

A-Score: 5.3/10

Value: 0.9

Growth: 7.3

Quality: 6.6

Yield: 0.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

Lincoln Electric

A-Score: 5.3/10

Value: 2.2

Growth: 6.4

Quality: 6.6

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Toro

A-Score: 4.8/10

Value: 3.9

Growth: 5.4

Quality: 6.0

Yield: 3.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

Stanley Black & Decker

A-Score: 4.5/10

Value: 5.1

Growth: 3.1

Quality: 4.2

Yield: 7.0

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

10.86%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.12%

Stanley Black & Decker, Inc. - US8545021011

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SWK

1.c. Company Highlights

Higher Yield

Lower Growth

Lower Quality

Earnings Beats

Revenues Beats

Average Quality

Revenues Miss

Stable Momentum

Weak Momentum

2. Strong FY2025 Results with Margin Expansion

Segment Performance

Guidance and Outlook

Valuation and Metrics

Margin Expansion and Tariff Mitigation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.69%)

6. Segments

Tools & Outdoor

Expected Growth: 3%

Industrial

Expected Growth: 1%

7. Detailed Products

Power Tools

Hand Tools

Storage Solutions

Engineered Fastening

Infrastructure

Oil and Gas

8. Stanley Black & Decker, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Stanley Black & Decker, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

91.96$

Current Price

91.96$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA