What Happened?
Shares of manufacturing company Stanley Black & Decker (NYSE: SWK) fell 7.8% in the afternoon session after the company reported second-quarter results that beat profit forecasts but fell short on revenue, raising investor concerns about sales and profitability. The toolmaker posted adjusted earnings of $1.08 per share, which beat Wall Street forecasts. However, revenues of approximately $3.95 billion missed consensus estimates and represented a 2% decline from the prior year. The company attributed the sales drop to a sluggish outdoor buying season and disruptions related to tariffs. Compounding the concerns, the company's gross margin also declined year-over-year, signaling pressure on its profitability. The combination of a revenue shortfall and shrinking margins overshadowed the earnings beat, leading investors to sell off the stock.
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What Is The Market Telling Us
Stanley Black & Decker’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 11.9% on the news that the company reported weak third-quarter earnings results and provided EPS and revenue forecasts for the full year, which fell short of Wall Street's estimates. The weaker top line growth was driven by a blend of slower consumer and automotive production and the recent divestiture (sales) of its Infrastructure business. Overall, this quarter could have been better.
Stanley Black & Decker is down 14.4% since the beginning of the year, and at $68.40 per share, it is trading 37.9% below its 52-week high of $110.13 from September 2024. Investors who bought $1,000 worth of Stanley Black & Decker’s shares 5 years ago would now be looking at an investment worth $438.27.
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