Top Value Stock Analysis: SWK – 82

Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.

Value Stock Analysis as on 28 October 2023

Top Value Stock

NYSE: Stanley Black & Decker, Inc. (SWK)

• Stanley Black & Decker is a standout business with a top-notch brand portfolio, a strong reputation for quality and durability, a diverse revenue base, and a successful track record in mergers and acquisitions.
• The company is a prominent worldwide supplier of manual and electric tools, catering to commercial and retail customers with its product offerings.
• The SWK has encountered difficulties, such as decreasing growth and profitability, resulting from shifts in market conditions. We anticipate that these issues will be alleviated in the upcoming year.
• The company’s core products encompass electric power tools, pneumatic tools and fasteners, home and garden products, hydraulic tools, and high-performance heavy equipment attachments.
• SWK has 100+ manufacturing facilities including 50 in the US and has a presence in more than 60 countries.
• Stanley Black & Decker’s current focused segment is Tools & Outdoor and Industrial businesses.

Revenue Splits of Stanley Black & Decker’s Business:

What we think are pros of business:

1. Stanley Black & Decker’s well-established nature and successful business model make it a favored option for investors seeking dividends.
2. SWK is a top-notch company, boasting a robust brand portfolio, a diversified revenue structure, and a well-executed capital allocation approach.
3. Price movement, trading volume, momentum, and relative strength indicators all point towards SWK shifting from a bearish trend to a bullish one, with indications of institutional buying.
4. Improvements in cash flow production will be a key bullish indicator for investors to look for going forward.
5. The company collaborates with industry leaders and technology companies to develop integrated solutions and expand its reach in emerging markets.
6. Its Parent brands are known for their high quality, durability, and range of products. This contributes to customer loyalty and recognition, enhancing the company’s competitive advantage in the market

What we think the risks are:

1. SWK has lowered its debt-to-equity ratio, but its short-term debt has outpaced long-term debt, causing increased pressure on interest payments.
2. Stanley Black & Decker has observed a yearly decline in the profit margin of its largest segment, while the margin of its Industrial segment remains steady.
3. SWK is still inside an accumulation zone and may stay there for some time. Economic downturns can reduce demand for SWK’s products.

Fundamentals:

• Market Cap: 12.5 Billion
• Revenue: 16 Billion
• 52 Week High-Low = 70.70 – 104.21
• EPS = -0.382
• Dividend: 3.24 (4.20%)

Technical for a long-term perspective:

• Trading at its 10-year low support and respecting lower trendline support on weekly time frame chart.

• The last monthly candle seems like a bullish formation and it will reverse soon.

• It may retest the Previous High of 100, which will acts as a resistance and after breaking its 100 levels it will become extremely bullish.

• There is very strong support of 70 and if it breaks down 70 then it will become bearish.

• RSI is very bullish and shows strength, it is reversing from its bottom/oversold zone.

Entry = 85

Stop Loss = 70

Target = 118 / 160 / 228

Our Final Thought:

Stanley Black & Decker is crucial for the US manufacturing industry’s revival, but it faces challenges with a significant margin drop despite higher retail sales. The market anticipates a swift free cash flow recovery, but it’s uncertain. Considering an investment in SWK now seems opportunity for those interested in Dividend stocks. The stock displays positive price trends, institutional accumulation, and bullish momentum.On the technical charts stock is at highest probability of reversing from the current levels towards higher levels. SWK is still inside an accumulation zone and may stay there for some time. Management is dedicated to reduce costs and inventory and streamline the business in such a way that makes easy to generate revenue in near future.

Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and  your own due diligence before investing.

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