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Stanley Black & Decker – Attractive After Recent Pullback

This is an introduction to my Stanley Black & Decker stock analysis. It is a follow up to my January 31, 2018 article at which time I viewed SWK as being overvalued. I now view SWK as an attractive long-term investment following the recent pullback in SWK's stock price.

Summary

  • In my January 31, 2018 article I stated that I perceived Stanley Black & Decker to be overvalued despite the pullback from its early January highs. Subsequent to my previous article, SWK has retraced further.
  • SWK released its Q1 2018 results on April 20, 2018 and has revised its GAAP EPS range to $7.40 - $7.60 from $7.80 - $8.00. Adjusted EPS guidance of $8.30 - $8.50 and a Free Cash Flow (FCF) conversion of ~100% were reiterated.
  • SWK offers long-term growth potential and a lengthy record of annual dividend increases but yield hungry investors will likely overlook SWK because of its unattractive dividend yield.

Introduction

This Stanley Black & Decker (NYSE: SWK) article is a follow up to my January 31, 2018 article in which I indicated I was of the opinion that SWK was overvalued. I, therefore, indicated I would bide my time before initiating a position.

SWK is certainly an investor friendly company. It provides considerable investor information which can be viewed here.

Be aware that as I compose this article, the ‘Download Investor Presentation’ link takes you to a January 2018 presentation. This presentation does not reflect the very recent downward revised FY2018 Diluted GAAP EPS guidance. This article, however, provides my opinion on SWK as a potential investment taking into consideration the reduced GAAP guidance.

Vision and Strategic Imperatives

Many investors make investment decisions on the basis of short-term results. In my opinion, this is short-sighted. I, therefore, think it is important to ‘tune out the noise’ and to focus on management’s strategic vision and goals and objectives which it has communicated to its shareholders. In this regard, I strongly encourage you to review SWK’s Investor Day Presentation of May 16 2017.

Please click here to read my Stanley Black & Decker stock analysis.

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By |April 22nd, 2018|General Investing|Comments Off on Stanley Black & Decker – Attractive After Recent Pullback

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