Stanley Black & Decker (SWK) appears an attractive pick given a noticeable improvement in the company’s earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts’ growing optimism on the earnings prospects of this tool company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool — the Zacks Rank — is principally built on this insight.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Stanley Black & Decker, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $2.20 per share for the current quarter, which represents a year-over-year change of +3.29%.
The Zacks Consensus Estimate for Stanley Black & Decker has increased 16.16% over the last 30 days, as six estimates have gone higher while one has gone lower.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $7 per share, representing a year-over-year change of -16.67%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, seven estimates have moved up for Stanley Black & Decker versus two negative revisions. This has pushed the consensus estimate 10.86% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Stanley Black & Decker currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.