Stanley Black & Decker, Inc. SWK is witnessing solid momentum in the Tools & Outdoor segment. The segment’s organic revenues in the fourth quarter of 2024 increased 3% to $3.2 billion, driven by persistent strength in its DEWALT business and a solid holiday season. Impressive demand for several brands like powershift, Construction Jack and toughsystem, along with new product launches, is driving its DEWALT business. However, persistent softness in the DIY market and depressing demand for power tools remain concerning.

The company is poised to benefit from its cost-reduction program, which is expected to aid the bottom line and drive margins. The program comprises a series of initiatives to resize the organization, reduce inventory and optimize the supply chain for pursuing sustainable long-term growth.

Since its inception in mid-2022, this program has generated roughly $1.5 billion in pre-tax run-rate savings and reduced inventory by more than $2 billion. The company is expected to generate pre-tax run rate savings of $2 billion by the end of this year, with an adjusted gross margin of more than 35% in the long term.

SWK remains committed to rewarding its shareholders handsomely through dividend payouts. In 2024, the company used $491.2 million for paying out dividends, reflecting an increase of 1.8% year over year. It bought back shares worth $17.7 million in the same year. Also, in July 2024, the quarterly dividend was hiked by a penny to 82 cents per share.

SWK Stock’s Price Performance

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In the past three months, this Zacks Rank #3 (Hold) company's shares have gained 1% against the industry’s 0.5% decline.

However, persistent softness in the automotive end market, owing to headwinds in the global automotive OEM light vehicle production and constrained capex spending, has been affecting its Industrial segment’s performance. Revenues from the segment declined 15.4% year over year to $492.9 million.

High debt levels remain another concern. Exiting 2024, the company’s long-term debt remained high at $5.6 billion. Its current maturities of long-term debt totaled $500.4 million. Also, considering its high debt level, its cash and cash equivalents of $290.5 million do not look impressive.

Stocks to Consider

Some better-ranked companies from the same space are discussed below.

RBC Bearings Incorporated RBC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.

Applied Industrial Technologies, Inc. AIT presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 5.3%. The Zacks Consensus Estimate for AIT’s fiscal 2025 (ending June 2025) earnings has improved 1.4% in the past 60 days.

The Middleby Corporation MIDD presently carries a Zacks Rank of 2. MIDD delivered a trailing four-quarter average earnings surprise of 1.9%. In the past 60 days, the consensus estimate for MIDD’s 2025 earnings has inched up 0.8%.

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Stanley Black & Decker, Inc. (SWK) : Free Stock Analysis Report

RBC Bearings Incorporated (RBC) : Free Stock Analysis Report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

The Middleby Corporation (MIDD) : Free Stock Analysis Report

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