NEW YORK (TheStreet) -- Stanley Black & Decker (SWK) has been upgraded to "outperform" from "market perform," said Wells Fargo on Tuesday. The firm said the revision was a valuation call based on the sum-of-the-parts.
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Separately, TheStreet Ratings team rates STANLEY BLACK & DECKER INC as a Buy with a ratings score of A-. The 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 9.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $731.70 million or 33.49% when compared to the same quarter last year. In addition, STANLEY BLACK & DECKER INC has also modestly surpassed the industry average cash flow growth rate of 25.86%.
- The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that SWK's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
- STANLEY BLACK & DECKER INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STANLEY BLACK & DECKER INC increased its bottom line by earning $3.27 versus $2.78 in the prior year. This year, the market expects an improvement in earnings ($5.40 versus $3.27).
- 39.66% is the gross profit margin for STANLEY BLACK & DECKER INC which we consider to be strong. Regardless of SWK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.93% trails the industry average.
- You can view the full analysis from the report here: SWK Ratings Report