NEW YORK (TheStreet) – Disappointing quarterly results and a weak forecast from heavy-equipment maker Caterpillar (CAT) - Get Caterpillar Inc. Report does not bode well for Stanley Black & Decker (SWK) - Get Stanley Black & Decker, Inc. Report . When Stanley reports its own results on Thursday, it is likely to say -- as Caterpillar did -- that a stronger U.S. dollar hurt its earnings overseas.
That means owning the stock of the hardware company is risky, despite its annual dividend of $2.08 a share, which translates into a better-than-market average yield of 2.2%.
About half of Stanley's revenue comes from the U.S. In the third quarter, about 26% came from Europe and 17% from emerging markets. That means about half of the company's revenue may be hurt by the strong U.S. dollar, which translates into lower earnings overseas. Companies such as Stanley can raise their prices abroad to compensate, but they do so at the risk of hurting sales.
For the fourth quarter, analysts estimate Stanley will report earnings of $1.53 per share on revenue of $2.91 billion. That would be a 16% increase in earnings from a year earlier, and a 1% increase in revenue. For the full year, analysts estimate earnings of $5.62 per share on revenue of $11.31 billion.
On Wednesday, shares of Stanley shares closed at $90.51, down 79 cents.
TheStreet Ratings team rates STANLEY BLACK & DECKER INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate STANLEY BLACK & DECKER INC (SWK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, increase in net income, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
You can view the full analysis from the report here: SWK Ratings Report
At the time of publication, the author held no position in any of the stocks mentioned