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Based on Stanley Black & Decker, Inc.’s (NYSE:SWK) earnings update in December 2018, analyst consensus outlook appear vastly optimistic, as a 84% rise in profits is expected in the upcoming year, against the previous 5-year average growth rate of 9.3%. Currently with trailing-twelve-month earnings of US$645m, we can expect this to reach US$1.2b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Stanley Black & Decker in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Stanley Black & Decker in the longer term?
The longer term view from the 18 analysts covering SWK is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of SWK’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, SWK’s earnings should reach US$1.5b, from current levels of US$645m, resulting in an annual growth rate of 18%. EPS reaches $10 in the final year of forecast compared to the current $4.33 EPS today. With a current profit margin of 4.6%, this movement will result in a margin of 9.8% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Stanley Black & Decker, there are three key factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Stanley Black & Decker worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Stanley Black & Decker is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stanley Black & Decker? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.