Will Stanley Black & Decker's (SWK) Q3 Earnings Disappoint?

Stanley Black & Decker, Inc. (NYSE:SWK) is slated to report third-quarter 2019 results on Oct 24, before the market opens.

The company delivered better-than-expected results in three of the last four quarters while recorded in-line results once. Average earnings surprise was a positive 9.09%. In the last reported quarter, its earnings of $2.66 surpassed the Zacks Consensus Estimate of $2.55.

In the last three months, shares of the company edged down 0.5% compared with the industry’s decline of 2.3%.

Let us see how things are shaping up for Stanley Black & Decker this quarter.

Factors Likely to Influence Q3 Results

Weakness in the industrial end markets affected Stanley Black & Decker in the second quarter, resulting in a 3% organic sales decline for the Industrial segment. This trend is expected to have continued in the third quarter and negatively impacted the segment’s top-line performance due to soft automotive and general industrial end markets.

The Zacks Consensus Estimate for the Industrial segment’s third-quarter sales is pegged at $637 million, indicating a 2% decline from the previous quarter’s reported figure. On a year-over-year basis, the segment’s revenues are likely to grow 13.3%.

Transformational activities are expected to have impacted the Security segment’s performance in the third quarter. The Zacks Consensus Estimate for the segment’s third-quarter sales is pegged at $482 million, suggesting a 0.6% decline from the year-ago reported figure.

Stanley Black & Decker is exposed to tariffs, foreign currency woes and commodity inflation, which escalated cost of sales and lowered gross margin in the second quarter. These are anticipated to have an impact on the company’s third-quarter margin as well. Also, high debts and related financial obligations are likely to have hurt its profitability.

Stanley Black & Decker anticipates earnings of 23% of the annual projection of $8.50-$8.70 per share for third-quarter 2019.

The Zack Consensus Estimate for the company’s earnings per share is pegged at $2.02, indicating a 2.9% decline from the year-ago reported figure and a 24.1% fall sequentially. Also, the consensus estimate for revenues of $3,641 million suggests 4.2% growth from the year-ago quarter’s reported number but a decline of 24.1% from the last reported quarter.

The growing polarity of products (Craftsman, DeWalt FlexVolt and others ) within the Tools & Storage segment, expansion in emerging markets, innovation, favorable e-commerce trends, effective pricing actions and cost-reduction efforts are expected to have aided the company’s performance in the third quarter.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Stanley Black & Decker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Stanley Black & Decker has an Earnings ESP of -0.27%.

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise