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Stanley Black & Decker Boosts Q4 Growth, Cash Flow Forecasts

Stanley Black & Decker said free cash flow is likely to rise past $1 billion over the fourth quarter, with organic growth improving thanks to industrial demand for tools and storage.

Stanley Black & Decker  (SWK) - Get Stanley Black & Decker, Inc. Report boosted its fourth quarter sales and cash flow forecasts Wednesday thanks in part to stronger-than-expected industrial demand from its tool and storage business. 

Stanley Black & Decker said it sees organic growth for the three months ending in December of around 10%, well ahead of its prior forecast of between 3% and 5%. The group also expects free cash flow to be 'greater than' $1 billion, an improvement from its earlier estimate of between $800 million and $900 million. 

The group will publish its fourth quarter earnings January 28.

"These revised assumptions are a result of stronger demand across North America, Europe and emerging markets in Tools and Storage as well as a stronger performance in Engineered Fastening and Attachment Tools within Industrial," the company said in a filing with the Securities and Exchange Commission. "Tools & Storage United States Retail POS is tracking above the high end of our planning assumption, with the quarter to date growth up 22% through December 5th."

"In the fourth quarter, the stronger demand is expected to generate improved operating leverage and result in a second consecutive quarter of historically strong operating margin rate performance for the Company," the statement noted.  

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Stanley Black & Decker shares were marked 2.8% higher in early Wednesday trading to change hands at $181.00 each in a move that extends the stock's six-month gain to around 29%.

Stanley Black & Decker posted stronger-than-expected third quarter earnings of $2.89 per share in late October, but its $3.9 billion in revenues, a 6% gain from the same period last year, narrowly missed Wall Street forecasts. 

Lowe's Companies  (LOW) - Get Lowe's Companies, Inc. Report shares, meanwhile, could get a boost from the Stanley Black & Decker update, as investors look to the improving margin forecasts for both groups, even as they face likely declines in comparable sales next year as the COVID impact from 2020 peels away.

Lowe's shares were marked 1.4% higher at $165.71 each in early Wednesday trading.

Lowe's reiterated its fiscal 2021 sales forecast, which it sees rising 22% from last year, when it unveiled a $15 billion share buyback plan earlier this month. Lowe's also said its sees comparable sales growth of between 15% and 20% for its fourth quarter, which ends in January, and adjusted earnings per share of between $1.10 and $1.20.