Stanley Black & Decker (SWK) Stock Dips on Mixed Q3 Results, Narrowed 2024 Guidance
Stanley Black & Decker Inc.’s (SWK) shares took a hit in pre-market trading on Tuesday, following the release of mixed third-quarter results and a revised 2024 outlook. Despite positive developments, the company’s revenue took a hit due to a challenging consumer environment and a dip in automotive production, leading to a decline in overall sales.
Key Highlights:
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Sales Decline:
SWK reported a 5.2% year-over-year drop in third-quarter sales, reaching $3.751 billion. This missed analysts’ expectations of $3.804 billion. The decline was attributed to weak demand in certain end markets, partially offset by growth in the DEWALT brand. The divestiture of the infrastructure business also contributed to a 2% decline in revenue growth.*
Profitability Gains:
While sales declined, the company showcased improvements in its bottom line. Gross profit jumped 5.7% to $1.12 billion, with the gross margin expanding to 29.9% (up 310 basis points). Adjusted gross margin also saw a strong increase, reaching 30.5% (up 290 basis points year-over-year).*
Strong Cash Flow:
Stanley Black & Decker generated substantial cash flow during the quarter, with operating cash flow reaching $285.8 million compared to $443.9 million in the prior year. Free cash flow came in at roughly $199.3 million, demonstrating the company’s financial strength.*
Cost Reduction Program:
The company’s Global Cost Reduction Program continued to deliver results, generating an additional $105 million in pre-tax savings during the third quarter. Since mid-2022, this program has contributed to total savings of approximately $1.4 billion.2024 Outlook:
Stanley Black & Decker revised its adjusted earnings per share (EPS) guidance for 2024, narrowing it to a range of $3.90 to $4.30 (from the previous range of $3.70 to $4.50). This new guidance is still slightly below analysts’ expectations of $4.20. However, the company reaffirmed its free cash flow guidance, projecting $650 million to $850 million.
Stock Performance:
SWK shares were trading lower by 6.83% at $95.89 in pre-market trading on Tuesday. This downward movement reflects investor concerns about the company’s revenue performance and the narrowed 2024 guidance.
