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Stanley Black & Decker Shares Dip as Inflation Hits Guidance

'Commodity and supply chain headwinds' could cause $690 million of costs this year and $600 million-$650 million in 2022, Stanley Black & Decker says.
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Shares of Stanley Black & Decker  (SWK) - Get Free Report eased on Thursday after the tool and equipment major lowered its full-year earnings guidance amid burgeoning inflation.

The New Britain, Conn., company cut its estimate for 2021 adjusted earnings per share to a range of $10.90 to $11.10 from $11.35 to $11.65 previously.

The new amount is beneath the FactSet analyst consensus of $11.54. A quarter ago, Stanley Black & Decker boosted its forecast range to $10.70 to $11, MarketWatch reports.

Commodity, transit and labor inflation accounts for $1.25 of the latest projection.

Container and transportation costs showed a “dramatic increase” in the third quarter, as “average container spot prices are now nearly seven times what we were paying earlier this year,” Lee McChesney, vice president of corporate finance, said on the earnings call, according to FactSet.

“These underlying assumptions raise our full-year commodity and supply chain headwinds to an estimate of approximately $690 million, assuming [the] impacts continue. We are also forecasting approximately $600 million to $650 million of carryover cost headwinds for 2022.”

Stanley recently traded at $182.02, down 2.3%. The stock has slipped 12% in the past six months.

In August, Stanley agreed to buy the 80% of MTD Holdings that it doesn't already own for $1.6 billion cash. SWK purchased a 20% stake in 2019.

MTD makes Cub Cadet and Troy-Bilt lawn tractors and power tools.

"We have worked directly with MTD over the last three years and have been impressed" with its management, staff and "dedication to innovation in the outdoor space," Stanley Black & Decker Chief Executive James Loree said in a statement.