Stanley Black & Decker Shows Staying Power With 57 Years of Increases and a 4.0% Yield

Stanley Black & Decker is executing a comprehensive transformation that has already delivered $1.4 billion in pre-tax run-rate savings while targeting an additional $2 billion in cost reductions by 2025. The company’s operational improvements are driving margin expansion, with adjusted gross margins expected to exceed 35% long-term, supported by strategic divestitures and focused capital allocation.

The combination of stronger earnings, a solid yield, and aggressive cost reduction initiatives positions the company for sustained growth and shareholder returns.

Meanwhile, the stock trades at 15.1 times the company’s 2025 forward earnings forecast.

STANLEY BLACK & DECKER INC. (New York symbol SWK; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools. In addition to brands Stanley and Black & Decker, it also offers top-selling brands DeWalt, Lenox, Irwin and Craftsman.

In April 2024, the company sold its Stanley Infrastructure business, which makes tools for industrial users, to Sweden’s Epiroc AB. It plans to use the proceeds of $760 million to pay down debt.

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In the quarter ended September 30, 2024, Stanley’s revenue declined 5.1%, to $3.75 billion from $3.95 billion. Revenue was lower as growth at DeWalt and aerospace fasteners was offset by lower overall demand and the sale of the Stanley Infrastructure business. Excluding one-time items, the company earned $1.22 a share (or a total of $185.0 million). That was up 16.2% from $1.05 a share (or $158.2 million). The company was able to successfully cut costs.

Value Stocks: Stanley Black & Decker’s Earnings Turnaround Gains Momentum

Stanley is currently restructuring its operations, which includes closing factories and shrinking the number of products it makes. The plan should cut $1.5 billion from its annual costs in 2024. Those annual savings should rise to $2.0 billion by the end of 2025.

The plan should also lift its gross profit margin (gross profits divided by revenue—the higher, the better) from about 30% in 2024 to between 35% and 37% in 2027 and beyond.

Stanley expects its turnaround plan to continue to lift its earnings. The stock trades at a low 15.1 times its forecast 2025 earnings of $5.48 a share.

Meanwhile, with the September 2024 payment, the company increased your quarterly dividend by 1.2%, to $0.82 a share instead of $0.81. The annual rate of $3.28 a share yields 4.0%. The company has paid regular dividends for 148 years and had raised the annual rate each year for the past 57 years.

Recommendation in Dividend Advisor: Stanley Black & Decker Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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