Stanley Black & Decker, Inc. (NYSE:SWK) shares fell 4.3% to US$159 in the week since its latest yearly results. Revenues of US$14b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$6.35, missing estimates by 5.0%. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Stanley Black & Decker’s 17 analysts is for revenues of US$15.0b in 2020, which would reflect a modest 3.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to soar 35% to US$8.72. Before this earnings report, analysts had been forecasting revenues of US$15.0b and earnings per share (EPS) of US$8.86 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$182, showing that the business is executing well and in line with expectations. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Stanley Black & Decker, with the most bullish analyst valuing it at US$200 and the most bearish at US$164 per share. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It’s pretty clear that analysts expect Stanley Black & Decker’s revenue growth will slow down substantially, with revenues next year expected to grow 3.6%, compared to a historical growth rate of 6.2% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 1.6% next year. So it’s pretty clear that, while Stanley Black & Decker’s revenue growth is expected to slow, it’s still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that Stanley Black & Decker’s revenues are expected to grow faster than the wider market. The consensus price target held steady at US$182, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Stanley Black & Decker going out to 2024, and you can see them free on our platform here.
You can also see whether Stanley Black & Decker is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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