Should S&P’s Credit Downgrade and Outlook Shift Prompt a Reassessment by Stanley Black & Decker (SWK) Investors?

• In early October 2025, S&P Global Ratings downgraded Stanley Black & Decker’s credit rating to ‘BBB+’ from ‘A-’ with a negative outlook, citing slower-than-expected deleveraging and continued operational challenges for the company.
• This downgrade signals concerns regarding Stanley Black & Decker’s balance sheet strength, as S&P expects the company’s adjusted debt to EBITDA to remain above 3x and EBITDA interest coverage around 6x.
• We’ll examine how S&P’s downgraded outlook for leverage and operational performance could impact Stanley Black & Decker’s investment narrative.

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Stanley Black & Decker Investment Narrative Recap

Owning shares in Stanley Black & Decker typically requires confidence in management’s ability to overcome operational challenges, achieve cost savings, and drive renewed earnings growth through supply chain transformation and product innovation. The recent S&P Global Ratings downgrade to ‘BBB+’ highlights ongoing balance sheet pressures and could weigh on perceptions of near-term financial flexibility, but the company’s major short-term catalyst, a return to sustained margin expansion from supply chain improvements, remains the primary watchpoint, while the risk of persistent margin compression heightens with this revised leverage outlook.

The upcoming third quarter 2025 earnings report, set for November 4, stands out as the next meaningful check-in point for operational progress and management’s response to both the credit rating action and evolving market headwinds. Investors will be watching the first quarterly results under the direction of new CEO Christopher Nelson, which could provide updated commentary on deleveraging and ongoing cost control, crucial elements for addressing near-term risks and supporting the recovery thesis.

On the other hand, persistent margin pressure tied to weaker-than-expected end-market demand is a factor that every Stanley Black & Decker investor should be aware of...

Read the full narrative on Stanley Black & Decker (it's free!)

Stanley Black & Decker's outlook anticipates $16.8 billion in revenue and $1.3 billion in earnings by 2028. This is based on an expected annual revenue growth rate of 3.5% and a $821.7 million increase in earnings from the current level of $478.3 million.

Uncover how Stanley Black & Decker's forecasts yield a $87.82 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have published 10 fair value estimates for Stanley Black & Decker, ranging from US$47.77 to US$139 per share. These diverse views highlight how expectations around margin recovery and operational risks can diverge, so explore several perspectives before drawing your own conclusions.

Explore 10 other fair value estimates on Stanley Black & Decker - why the stock might be worth 37% less than the current price!

Build Your Own Stanley Black & Decker Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Stanley Black & Decker research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Stanley Black & Decker research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Stanley Black & Decker's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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