Stanley Black Exhibits Strong Prospects Despite Persisting Headwinds

Stanley Black & Decker, Inc. SWK is benefiting from its multi-year global cost-reduction program, aimed at resizing the organization, lowering inventory levels and optimizing the supply chain to strengthen profitability and position it for sustainable long-term growth. Launched in mid-2022, the program has delivered approximately $1.8 billion in pre-tax run-rate savings and reduced inventory by more than $2 billion. 

In the second quarter of 2025, SWK realized about $150 million in pre-tax run-rate cost savings. The program is expected to continue driving cost reductions in the coming quarters, with a target of $2 billion in pre-tax run-rate savings by the end of 2025 and a long-term adjusted gross margin above 35%. Also, $1.5 billion of the total savings is anticipated to come from four core supply-chain transformation initiatives, including operations excellence, material productivity, footprint optimization and complexity reduction.

SWK solidified its product portfolio and leveraged business opportunities through asset additions. In December 2021, the company acquired two leading outdoor power equipment providers—an 80% stake in MTD Holdings and Excel Industries—for a total of $1.9 billion. These acquisitions expanded Stanley Black’s cordless electric outdoor power equipment portfolio. With rising demand for home and outdoor products and the growing shift toward electrification, the addition of MTD Holdings and Excel Industries has significantly enhanced the company’s position in the roughly $25 billion outdoor products market.

Stanley Black is committed to rewarding its shareholders through dividend payments and share buybacks. In the first six months of 2025, the company paid $248.5 million in dividends, up 2% year over year. It also bought back shares worth $12.5 million in the period. Also, in July 2025, the company hiked its dividend by a penny to 83 cents per share (annually: $3.32 per share).

Price Performance of SWK

SWK currently carries a Zacks Rank #3 (Hold). In the past month, the stock has gained 5.4% compared with the industry’s 0.4% growth.

However, softness across both segments is concerning for SWK. The Tools & Outdoor segment is witnessing weakness owing to decreased demand for outdoor products and tariff-related shipment disruptions. Also, persistent softness in the DIY market and depressing demand for hand tools are ailing the segment. Weakness in the automotive end market, owing to headwinds in the global automotive OEM light vehicle production and constrained capex spending, is affecting the Engineered Fastening segment. Also, softness in the general industrial market and the divestiture of the infrastructure business have been impacting the segment’s sales.

The company’s international presence exposes it to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require it to either raise prices or see its profit margins shrink in locations outside the United States. Adverse foreign currency translation lowered the company’s sales by 1% year over year in the first half of 2025.

Stocks to Consider

Some better-ranked companies are discussed below.

Lincoln Electric Holdings, Inc. LECO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LECO delivered a trailing four-quarter average earnings surprise of 10.6%. In the past 60 days, the Zacks Consensus Estimate for Lincoln Electric’s 2025 earnings has increased 6.2%.

Crane Company CR presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 7.5%.

In the past 60 days, the consensus estimate for CR’s 2025 earnings has increased 4%.

DNOW Inc. DNOW presently carries a Zacks Rank of 2. DNOW delivered a trailing four-quarter average earnings surprise of 44.1%.

In the past 60 days, the consensus estimate for DNOW’s 2025 earnings has increased 9.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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