A month has gone by since the last earnings report for Stanley Black & Decker (SWK). Shares have added about 1.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stanley Black & Decker due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Stanley Black & Decker, Inc. before we dive into how investors and analysts have reacted as of late.
Stanley Black's Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Stanley Black reported first-quarter 2026 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 61 cents. The bottom line increased 6.7% year over year.
Stanley Black’s net sales of $3.85 billion beat the consensus estimate of $3.74 billion. The top line increased 2.7% from the year-ago quarter.
Segmental Discussion
Effective from the first quarter of 2025, it has renamed the Industrial segment as the Engineered Fastening segment. It had no impact on the company's consolidated financial statements or segment results.
Revenues from the company’s primary segment, Tools & Outdoor, totaled $3.34 billion, which increased 2% from the year-ago quarter. However, the segment’s organic revenues decreased 1%. Our estimate was $3.29 billion.
Revenues from the Engineered Fastening segment grossed $511 million, up 10% year over year. The segment’s organic revenues increased 7%. Our estimate was $459.3 million.
Margin Profile
Stanley Black’s cost of sales was up 2.5% year over year to $2.69 billion. The gross profit increased 3.3% year over year to $1.16 billion. The gross margin increased 20 basis points (bps) year over year to 30.1%.
Selling, general and administrative expenses increased 2% year over year to $884.0 million. Adjusted EBITDA was $354.7 million, indicating a year-over-year decrease of 2%. The margin decreased 50 bps to 9.2%.
Balance Sheet and Cash Flow
While exiting the first quarter, Stanley Black had cash and cash equivalents of $333.7 million compared with $280.1 million at the end of fourth-quarter 2025. The long-term debt balance was $4.70 billion, in line with the figure reported at the end of fourth-quarter 2025.
In the first three months of 2026, net cash used for operating activities was $388.8 million compared with $420 million used in the year-ago period. Capital and software expenditures totaled $58.5 million, down from $65 million reported in the year-ago period. Free cash flow (before dividends) was ($447.3) million compared with ($485.0) million a year ago.
In the first three months of 2026, the company paid out dividends worth $126 million to its shareholders, up 1.2% from the year-ago period.
2026 Guidance
Stanley Black updated its 2026 guidance. The company now anticipates earnings to be $4.15-$5.35 per share compared with $3.15-$4.35 expected earlier. Adjusted earnings are projected to be $4.90-$5.70 per share. The company targets to generate annual free cash flow (non-GAAP) of $700-$900 million, increasing 16% at the midpoint.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Stanley Black & Decker has a average Growth Score of C, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Stanley Black & Decker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).