A month has gone by since the last earnings report for Stanley Black & Decker (SWK). Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Stanley Black & Decker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Stanley Black's Q3 Earnings Beat Estimates, Revenues Down Y/Y

Stanley Black reported third-quarter 2024 adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate of $1.03. The bottom line increased 16.2% year over year.

Stanley Black’s net sales of $3.75 billion missed the consensus estimate of $3.78 billion. The top line declined 5.1% year over year due to weakness in both segments.

Segmental Discussion

Revenues from the company’s primary segment, Tools & Outdoor, totaled $3.26 billion, which declined 2.7% year over year. Our estimate for segmental revenues was $3.3 billion.

Revenues from the Industrial segment grossed $488.0 million, down 18.5% year over year. Our estimate for segmental revenues was $511.4 million.

Margin Profile

Stanley Black’s cost of sales decreased 9.1% year over year to $2.6 billion. The gross profit increased 5.7% year over year to $1.1 billion. The gross margin increased 310 basis points (bps) year over year to 29.9%.

Selling, general and administrative expenses increased 0.4% year over year to $797.1 million. Adjusted EBITDA was $406.4 million, indicating year-over-year growth of 9.3%. The margin increased 140 bps to 10.8%.

Balance Sheet and Cash Flow

While exiting the third quarter, Stanley Black had cash and cash equivalents of $298.7 million compared with $449.4 million at the end of fourth-quarter 2023. The long-term debt balance was $5.6 billion, lower than $6.1 billion reported at the end of fourth-quarter 2023.

In the first nine months of 2024, net cash generated in operating activities was $285.8 million, down 35.6% year over year. Capital and software expenditures totaled $239.4 million, up from $216.4 million reported in the year-ago period. Free cash flow (before dividends) was $188.4 million compared with $205.6 million a year ago.

In the first nine months of the year, it paid out dividends worth $367.2 million to its shareholders, up 1.8% from the year-ago period.

2024 Guidance

Stanley Black expects adjusted earnings to be in the range of $3.90-$4.30 per share compared with $3.70-$4.50 per share anticipated earlier. The company anticipates earnings to be in the range of $1.15-$1.75 per share.

Stanley Black expects a free cash flow in the range of $0.65-$0.85 billion.