It has been about a month since the last earnings report for Stanley Black & Decker (SWK). Shares have lost about 8.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Stanley Black & Decker due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Stanley Black & Decker, Inc. before we dive into how investors and analysts have reacted as of late.
Stanley Black's Q4 Earnings Beat Estimates, Revenues Miss
Stanley Black & Decker reported fourth-quarter 2025 adjusted earnings of $1.41 per share, which beat the Zacks Consensus Estimate of $1.27. However, the bottom line decreased 5.4% year over year.
Stanley Black’s net sales of $3.68 billion missed the consensus estimate of $3.76 billion. The top line declined 1% from the year-ago quarter.
In 2025, Stanley Black reported net revenues of $15.1 billion, which decreased 2% year over year. However, the company’s adjusted earnings were $4.67 per share, down 7.1% year over year.
Stanley Black’s Segmental Discussion
Effective from the first quarter of 2025, Stanley Black has renamed the Industrial segment as the Engineered Fastening segment. It had no impact on the company's consolidated financial statements or segment results.
Revenues from the company’s primary segment, Tools & Outdoor, totaled $3.16 billion, which decreased 2.1% from the year-ago quarter. Our estimate was $3.26 billion.
Revenues from the Engineered Fastening segment grossed $524.2 million, up 6.4% year over year. Our estimate was $502.0 million.
Margin Profile
Stanley Black’s cost of sales was down 4.4% year over year to $2.46 billion. The gross profit increased 6.8% year over year to $1.22 billion. The gross margin increased 240 basis points (bps) year over year to 33.2%.
Selling, general and administrative expenses decreased 6.2% year over year to $801.8 million. Adjusted EBITDA was $497.3 million, indicating a year-over-year increase of 31.5%. The margin increased 330 bps to 13.5%.
Balance Sheet and Cash Flow
While exiting the fourth quarter, Stanley Black had cash and cash equivalents of $280.1 million compared with $290.5 million at the end of fourth-quarter 2024. The long-term debt balance was $4.70 billion, lower than $5.6 billion reported at the end of fourth-quarter 2024.
In 2025, net cash generated by operating activities was $971.2 million compared with $1.11 billion generated in the year-ago period. Capital and software expenditures totaled $283.3 million, down from $353.9 million reported in the year-ago period. Free cash flow (before dividends) was $687.9 million compared with $753.0 million a year ago.
In 2025, Stanley Black paid out dividends worth $500.6 million to its shareholders, up 1.9% from the year-ago period.
2026 Guidance
In 2026, Stanley Black anticipates earnings to be $3.15-$4.35 per share. Adjusted earnings are projected to be $4.90-$5.70 per share. The company targets to generate annual free cash flow (non-GAAP) of $700-$900 million, increasing 16% at the midpoint.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -31.38% due to these changes.
VGM Scores
Currently, Stanley Black & Decker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Stanley Black & Decker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Stanley Black & Decker, Inc. (SWK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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