Why Stanley Black & Decker (SWK) Stock Is Higher This Morning

NEW YORK (TheStreet) -- Shares of Stanley Black & Decker Inc. (SWK) are up 2.66% to $84.63.

The tool manufacturer reported first quarter profit of $161.9 million, or $1.02 a share, up from $81.1 million, or 51 cents a share, a year ago.

Excluding charges related to mergers and acquisitions, it posted earnings of $1.07 a share for the quarter.

Net sales were up 7% to $2.64 billion.

Analysts surveyed by Thomson Reuters projected earnings of 96 cents a share on revenue of $2.6 billion.

The company raised the low end of its adjusted per-share earnings for the year 5 cents to $5.35 to $5.50.

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TheStreet Ratings team rates STANLEY BLACK & DECKER INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate STANLEY BLACK & DECKER INC (SWK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 increase in stock price during the past year. 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 27.90%.
  • 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
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