Stanley Black & Decker Beats Q4 Earnings But Misses Revenues Estimates

Stanley Black & Decker (NYSE: SWK) reported mixed Q4 results, topping earnings estimates but falling short of revenues expectations. Logistical and supply chain challenges impacted volumes leading to lower revenues for the manufacturer of industrial tools and household hardware.

Mixed Q4 Numbers

Positively, adjusted earnings of $2.14 per share grew 30% year-over-year and beat analysts’ expectations of $2.04 per share.

Meanwhile, revenues jumped 2% year-over-year to $4.1 billion but lagged consensus estimates of $4.45 billion.

The lower-than-expected revenues reflected a decline in volumes as a result of a series of logistical and other supply chain constraints.

Further, gross margin for the quarter declined 630 bps to 29% as commodity inflation, higher supply chain costs, and lower volumes offset the benefits of better price realization.

FY2022 Buybacks of $4B

Concurrent with the earnings announcement, the company approved a share repurchase authorization of $4 billion for FY2022. Of the total buybacks, $2.0 billion to $2.5 billion are expected to occur in the first quarter.

FY2022 Outlook

Management issued the financial guidance for FY2022. The company forecasts adjusted earnings in the range of $12.00 to $12.50 per share, while the consensus estimate is pegged at $11.98 per share.

Management Weighs In

The CEO of Stanley Black & Decker, Jim Loree, commented, “We are well positioned with a more focused portfolio that provides us a compelling multi-year runway for growth, margin expansion and long-term.” shareholder value creation.”

CFO Donald Allan Jr., added, “Going forward, the organization is focused on driving above market organic growth, delivering on our price and cost control measures, successfully integrating MTD and Excel into the portfolio and leveraging the SBD Operating Model to improve our working capital efficiency in 2022.  We expect executing on these actions, as well as on our $4 billion allocation to repurchase shares, will deliver total revenue growth in the mid-twenties, 15% to 19% adjusted earnings per share growth and a strong free cash flow performance in 2022.”

Wall Street’s Take

Following the Q4 results, Morgan Stanley analyst Joshua Pokrzywinski lowered the price target on Stanley Black & Decker to $195.00 (10.7% upside potential) from $209 and reiterated a Buy rating.

Overall, the stock has a Strong Buy consensus rating based on 7 Buys and 1 Hold. At the time of writing, the average Stanley Black & Decker price target was $227.13, which implies 28.95% upside potential to current levels.

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