About Stanley Black & Decker
I thought you’d never ask! Stanley Black & Decker is one of those companies with a lot of brands under its tool belt. Some of their more notable brands include DeWalt, Craftsman, Irwin, and Bostitch.
Black and Decker, founded in 1910 and headquartered in New Britain, Connecticut, manufactures and sells tools and household hardware products. You can find SB&D’s products in places like Home Depot, Lowe’s, or Ace Hardware.
Black & Decker’s Financials
Women lie, men lie, but numbers don’t (usually, at least!).
At first glance, the company looks financially strong! Zero of the major analyst groups currently give SWK a “sell” or “decrease” position for the company’s stock.
The stock is up 66% from its COVID-19 low of $109. The company’s 2021 revenues are $14.53B, with a net income of $1.21B. With all of the brands under SWK’s name, the tool giant has created a sizeable moat. The company is largest in its space, dominating the tool industry. SWK employs nearly 53,000 and its closest competitor employing roughly 23,000.
The Stanley Black & Decker moat is REAL.
SWK maintains a 7.68% return on capital. Above 2% is the benchmark for creating value.
In terms of growth, the company runs faster than its competition. For example, with a net income metric last year of 94.57, its respective industry as a whole was -8.28.
The tool company also has a gross profit margin of 34.67 (which is fantastic), outpacing the industry’s 26.28. They also have a higher net profit margin than its competitors, largely because they have greater pricing control.
The company’s p/e ratio of 16.15 (above 20 is generally overvalued).
According to the numbers, there isn’t a lot to hate about Stanley Black & Decker!
Black & Decker’s future
When will Stanley Black & Decker do well? Well, right about now!
With the current home building mania happening all over the country (and the world), homebuilders and improvers are using power tools more than ever. Thus, while the businesses’ financial and industry position are strong, investors must understand that this giant operates in a cyclical industry, heavily tied to the real estate market.
When the current housing bubble bursts, SWK stock will likely follow. Even though the stock doesn’t currently appear to be overvalued (surprising), the best time to buy shares of SWK is when the market is humbled through an upcoming correction or recession.
It should also be noted that SWK had earnings last week, and the CEO, James Loree, discussed some of the supply chain issues the tool company is having. Loree mentioned that approximately $1 billion worth of inventory is currently tied up in the supply chain mess.
Despite the current challenges the company is facing, a quality company like Stanley Black & Decker handled prior tariff pressure amidst the China and US trade war (in 2019) fairly well.
Therefore, supply chain woes aren’t exactly new territory for Stanley Black & Decker. Given their past performance and perseverance, we believe the company is handling and will continue to handle the current supply chain mess to the best of its ability.
Should you buy Stanley Black & Decker stock?
All things considered, we think that while the company is in somewhat of a cyclical industry, it has a strong portfolio of brands and is financially able to weather any major storms that come its way. The stock won’t jump 800% in the next month, but it will likely offer shareholders stable stock price appreciation over time, which is what we love to see.
We currently give the company a “buy” rating.