Can Stanley Black & Decker (SWK) Beat Earnings This Season?

Industrial tool maker, Stanley Black & Decker, Inc. SWK is scheduled to report its second-quarter results on Jul 25 before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.37.

Stanley Black & Decker's first-quarter earnings of $1.07 per share surpassed the Zacks Consensus Estimate of 97 cents by 10.3%. Having recorded an average earnings surprise of 3.35% in the last four quarters, let us see whether Stanley Black & Decker can keep the earnings streak alive in the second quarter.

Factors to Influence Q2 Results

Industrial production in the U.S. grew 5.5% year over year in the second quarter. The growth included a 6.7% annual hike in manufacturing production and an 18.8% increase in mining production. Favourable industrial activities in the quarter indicate a healthy demand for industrial tools.

Stanley Black & Decker's earnings per share will be boosted by organic revenue growth and cost-reduction measures in the Construction & Do-It-Yourself (CDIY) and Industrial segments. Also, synergistic benefits from recent acquisitions will positively impact earnings. Shareholders' value will be enhanced through dividend payments and share buybacks.

However, risks associated with negative foreign currency translations and stiff competition in all businesses limit the Stanley Black & Decker's growth prospects in the near term. Further, organic revenue growth in the Security business are anticipated to remain restricted.

Earnings Whispers?

Our proven model does not conclusively show that Stanley Black & Decker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Expected Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently 0.00%. This indicates in-line earnings for the stock.

Zacks Rank: Stanley Black & Decker's Zacks Rank #3 (Hold), when combined with a 0.00% ESP, makes surprise predictions difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Nordson Corporation NDSN, with Earnings ESP of +1.77% and a Zacks Rank #2 (Buy).

Lincoln Electric Holdings Inc. LECO, with Earnings ESP of +1.10% and a Zacks Rank #3.

Kennametal Inc. KMT, with Earnings ESP of +1.12% and a Zacks Rank #3.