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Category: Stanley Black & Decker (SWK)
Date: 1 February 2021 Stock Price of Stanley Black & Decker (SWK): $173.49 We take a look at the 4th quarter earnings release of their 2020 fiscal year of Stanley Black & Decker a supplier of hand tools, power tools and other related accessories. For the quarter the group reported revenues of $4.4 billion and net income of $458 million.
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Donald Allan Jr., Executive Vice President and CFO - In 2020, we were proactive in preparing our cost base for the pandemic and the organization remained agile to capture revenue opportunities resulting from quickly improving markets which resulted in a historic financial performance."
About Stanley Black & Decker
In 1843, Frederick Stanley started a small shop in New Britain, Connecticut, to manufacture bolts, hinges and other hardware of high quality from wrought iron. In 1910, Duncan Black and Alonzo Decker started their shop in Baltimore, Maryland, and six years later obtained the world’s first patent for a portable power tool. Over the years the two companies amassed an unparalleled family of iconic brands and trusted products. In 2010, they came together as Stanley Black & Decker, a leading global diversified industrial. Known for superior quality, continual innovation and rigorous operational discipline, we remain driven by a passion for excellence and a commitment to serve the builders, makers and protectors of the world.
Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, electronic security solutions, healthcare solutions, engineered fastening systems, and more
Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, electronic security solutions, healthcare solutions, engineered fastening systems, and more
Overview of Stanley Black & Decker's 4th quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $4.407 billion (up from $3.714 billion from the same quarter of the previous year)
- Net sales increased by 18% over the last 12 months
- Cost of sales: $2.851 billion (up from $2.553 billion for the same quarter of the previous year)
- Operating expenses increased by 11.7% over the last 12 months
- Net income: $458 million (down from $199 million for the same quarter of the previous year)
- Diluted earnings per share: $0.70 (up from $0.69 for the same quarter of the previous year)
- PE ratio of Stanley Black & Decker: 62.4
- Dividend declared: $0.69
- Dividend yield: 1.6%
- Diluted weighted-average shares outstanding: 159.2 million (down from 151.2 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.381 billion
- Cash and cash equivalents per share: $8.67
- Cash and cash equivalents makes up 5% of Stanley Black & Decker's market capital
- Cash and cash equivalents makes up 5.9% of Stanley Black & Decker's total assets
- Inventories: $2.73 billion
- Inventories makes up 11.6% of Stanley Black & Decker's total assets
- Stanley Black & Decker's inventories grew by 21.3% over the last 12 months
- Accounts receivable: $1.51 billion
- Accounts receivable makes up 6.4% of Stanley Black & Decker's total assets
- Stockholders equity of Stanley Black & Decker: $11.059 billion
- Stockholders equity per share: $69.40
- Stanley Black & Decker is trading at 2.59 times its stockholders equity which is well outside the expected range of between 2 and 9 which most companies tend to trade at.
- For perspective the average firm on the S&P 500 has a price to book value of 4.2
Stanley Black & Deckers management commentary on their 4th quarter 2020 earnings report
New Britain, Connecticut, January 28, 2021 … Stanley Black & Decker (NYSE: SWK) today announced fourth quarter and full year 2020 financial results.
Stanley Black & Decker’s President & CEO, James M. Loree, commented, “Today’s report is a resounding affirmation of our commitment to purpose-driven performance. We have built a great company, anchored by a supportive, peopleoriented culture and grounded in a dedication to performance, innovation and social responsibility. Our fourth quarter and full year 2020 results attest to the fact that this formula is a winning one for the 2020s. In 2020, we demonstrated that corporations like ours, which put people first and strive to have a positive impact on all stakeholders and society at large, offer superior resilience in volatile and uncertain times, thus benefiting our shareholders through outstanding growth, cash flow, margin expansion and ESG.
“We are excited to turn the page on 2020 and we enter 2021 with optimism and a company that is running on all cylinders and gaining momentum. Despite challenging second half comparables, our 2021 outlook calls for positive organic growth, 11% adjusted EPS growth at the midpoint and another strong free cash flow performance. Our current planning assumption calls for the exercise of our MTD option and the addition of up to $3 billion of revenue in 2022, an exciting new growth driver which provides both a substantial boost to EPS accretion and a great expansion platform for years to come.
Stanley Black & Decker’s President & CEO, James M. Loree, commented, “Today’s report is a resounding affirmation of our commitment to purpose-driven performance. We have built a great company, anchored by a supportive, peopleoriented culture and grounded in a dedication to performance, innovation and social responsibility. Our fourth quarter and full year 2020 results attest to the fact that this formula is a winning one for the 2020s. In 2020, we demonstrated that corporations like ours, which put people first and strive to have a positive impact on all stakeholders and society at large, offer superior resilience in volatile and uncertain times, thus benefiting our shareholders through outstanding growth, cash flow, margin expansion and ESG.
“We are excited to turn the page on 2020 and we enter 2021 with optimism and a company that is running on all cylinders and gaining momentum. Despite challenging second half comparables, our 2021 outlook calls for positive organic growth, 11% adjusted EPS growth at the midpoint and another strong free cash flow performance. Our current planning assumption calls for the exercise of our MTD option and the addition of up to $3 billion of revenue in 2022, an exciting new growth driver which provides both a substantial boost to EPS accretion and a great expansion platform for years to come.
“In closing, I want to thank each and every one of our 53,000 employees. Their heroic performance in 2020 was exemplary, protecting the health and safety of colleagues, ensuring continuous operation of our factories and DCs, serving our customers who make the world and giving back to our communities. These extraordinary people made the difference in overcoming the challenges of 2020 and producing this exceptional outcome.”
2021 Outlook
Donald Allan Jr., Executive Vice President and CFO, commented, “In 2020, we were proactive in preparing our cost base for the pandemic and the organization remained agile to capture revenue opportunities resulting from quickly improving markets which resulted in a historic financial performance. Most notably we delivered 10% organic revenue growth in the second half along with full year gross and operating margin rate expansion, 8% EPS growth and a record free cash flow performance. It was a rewarding end to a year that was difficult on so many dimensions for our employees and the Company. We have prepared the businesses to emerge successfully from this economic disruption and we have a strong setup for growth in 2021.” Improving visibility has enabled management to reinstate guidance for 2021, although a wider than historical range has been provided to account for an operating environment that remains dynamic. The Company expects 2021 EPS to be $9.15 To $9.85 on a GAAP basis and $9.70 - $10.30 on an adjusted basis. Free cash flow conversion is expected to approximate GAAP Net Income. Management will discuss its 2021 planning assumptions on today’s earnings call. Allan continued,
“We plan to leverage our portfolio of growth catalysts to gain share as markets continue to improve and are focused on leveraging our cost actions to deliver margin expansion. In addition, the margin resiliency program remains in place to protect against unforeseen changes in the external environment or to support additional margin improvement or growth investments going forward. 5 “We believe the Company is well positioned to deliver sustained above-market organic growth, operating margin expansion, strong free cash flow generation and top-quartile shareholder returns over the long-term.”
2021 Outlook
Donald Allan Jr., Executive Vice President and CFO, commented, “In 2020, we were proactive in preparing our cost base for the pandemic and the organization remained agile to capture revenue opportunities resulting from quickly improving markets which resulted in a historic financial performance. Most notably we delivered 10% organic revenue growth in the second half along with full year gross and operating margin rate expansion, 8% EPS growth and a record free cash flow performance. It was a rewarding end to a year that was difficult on so many dimensions for our employees and the Company. We have prepared the businesses to emerge successfully from this economic disruption and we have a strong setup for growth in 2021.” Improving visibility has enabled management to reinstate guidance for 2021, although a wider than historical range has been provided to account for an operating environment that remains dynamic. The Company expects 2021 EPS to be $9.15 To $9.85 on a GAAP basis and $9.70 - $10.30 on an adjusted basis. Free cash flow conversion is expected to approximate GAAP Net Income. Management will discuss its 2021 planning assumptions on today’s earnings call. Allan continued,
“We plan to leverage our portfolio of growth catalysts to gain share as markets continue to improve and are focused on leveraging our cost actions to deliver margin expansion. In addition, the margin resiliency program remains in place to protect against unforeseen changes in the external environment or to support additional margin improvement or growth investments going forward. 5 “We believe the Company is well positioned to deliver sustained above-market organic growth, operating margin expansion, strong free cash flow generation and top-quartile shareholder returns over the long-term.”
Stanley Black & Decker (NYSE: SWK) stock price chart over the last 5 years
The image below shows the stock price history of Stanley Black & Decker (NYSE: SWK) over the last 5 years. And it's been a amazing time for Stanley Black & Decker. Over the 5 year period the stock of Stanley Black & Decker increased by 82.5%. Pretty decent returns provided to SWK investors.
The stock of Stanley Black & Decker is trading at closer to its 52 week high than it is to its 52 week low which to us its an indication that the short term sentiment and momentum of Stanley Black & Decker is positive at this point in time,
The stock of Stanley Black & Decker is trading at closer to its 52 week high than it is to its 52 week low which to us its an indication that the short term sentiment and momentum of Stanley Black & Decker is positive at this point in time,
Stanley Black & Decker (NYSE: SWK) latest stock valuation
So based on the 1st quarter 2020 earnings report of Stanley Black & Decker (NYSE: SWK) what do we value Stanley Black & Decker stock at? Based on their latest earnings report and plan to implement significant cost savings our valuation models provide a target (full value) price for Stanley Black & Decker stock at $173.50 a stock. We therefore believe the stock of Stanley Black & Decker is fully valued.
We usually recommend that long term fundamental or value investors buy into a stock at least 10% below our target (full value) price, which in this case is $173.50 We therefore believe a good entry point into Stanley Black & Decker is $156.20 or below.
We expect the stock of Stanley Black & Decker to trade in a narrow range in coming weeks and months as its currently trading at close to its target price.
We usually recommend that long term fundamental or value investors buy into a stock at least 10% below our target (full value) price, which in this case is $173.50 We therefore believe a good entry point into Stanley Black & Decker is $156.20 or below.
We expect the stock of Stanley Black & Decker to trade in a narrow range in coming weeks and months as its currently trading at close to its target price.
Next earnings release of Stanley Black & Decker
It is expected that Stanley Black & Decker will release their 1st quarter 2021 earnings report in late April 2021