Prospects for Stanley Black & Decker This Earnings Season

Stanley Black & Decker, Inc. (SWK - Free Report) is set to announce its earnings for the third quarter of 2024 on October 29, before the market opens.

The Zacks Consensus Estimate for the company's earnings has risen by 1% over the past two months. Stanley Black & Decker has a strong history of earnings surprises, having exceeded consensus estimates for four consecutive quarters, with an average surprise rate of 20.3%.

For this quarter, the revenue forecast for this New Britain, Connecticut-based company is $3.8 billion, which represents a 4.5% decline compared to the same period last year. The consensus adjusted earnings estimate stands at $1.03 per share, slightly lower than the adjusted earnings of $1.05 reported in the same quarter last year.

Now, let’s explore the key factors influencing Stanley Black's performance prior to this earnings announcement.

Key Factors Impacting Performance

The Industrial segment of Stanley Black is expected to benefit from a solid performance in its Engineered Fastening business, which is driven largely by strong demand in the aerospace sector. However, the lack of demand in the general industrial market may adversely impact this segment's overall performance.

Moreover, the divestment of its infrastructure business is predicted to negatively affect the year-over-year revenue comparison within this segment. It is anticipated that revenues for the Industrial segment will decrease by 14.6% from the previous year, landing at approximately $511.4 million.

The company has also faced challenges in the industrial sector, primarily due to a decline in power tool demand amid a slowdown in the DIY market. Nonetheless, robust sales from the DEWALT product line are expected to positively influence the Tools & Outdoor segment. This segment's revenue is projected to decline to $3.27 billion, marking a 2.6% drop from last year's figures.

On a positive note, Stanley Black's cost-cutting measures are likely to enhance its bottom line. The company's focus on improving profit margins through supply chain adjustments and inventory reductions might result in an adjusted gross margin of 29.1%, up from 27.6% in the same quarter last year.

However, the company's wide-ranging international operations expose it to foreign exchange risks. As a result, a stronger U.S. dollar is likely to have impacted Stanley Black's performance in overseas markets.

Forecast for Earnings

Our analysis suggests a favorable outcome for Stanley Black regarding its upcoming earnings report. A combination of a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) can increase the likelihood of exceeding earnings expectations. In this case, Stanley Black holds an Earnings ESP of +3.54%. The Most Accurate Estimate stands at $1.07 per share, above the Zacks Consensus Estimate of $1.03.

Zacks Rank: Currently, Stanley Black is ranked as a #3.

Other Notable Companies in the Sector

Apart from Stanley Black, several other companies in the Industrial Products sector are also expected to perform well this earnings season based on our analysis.

Ingersoll Rand Inc. (IR - Free Report) has an Earnings ESP of +1.22% and is ranked #2. This company will release its earnings results on October 31 and has a consistent record of exceeding the Zacks Consensus Estimate over the past four quarters with an average surprise of 11%.

Zebra Technologies (ZBRA - Free Report) demonstrates a positive outlook as well, with an Earnings ESP of +2.01% and a Zacks Rank of #3. Their earnings report is due on October 29, and they have also surpassed estimates in the past four quarters, achieving an average surprise of 11.9%.

Crane Company (CR - Free Report) also shows potential with an Earnings ESP of +0.09% and a Zacks Rank of #2. Their earnings results are expected on October 28, and they too have a track record of exceeding expectations for the past four quarters, achieving an average surprise of 11.2%.

Earnings, Performance, Forecast