Stanley Black & Decker: After A Really Bad Quarter Is the Stock A Buy Or Value Trap? | FAST Graphs
ฝัง
- เผยแพร่เมื่อ 28 ก.ย. 2024
- Warren Buffett once famously suggested that investors should be “greedy when others are fearful and fearful when others are greedy.” After a disastrous quarter Dividend King Stanley Black & Decker with a 55 year and running dividend increase streak has fallen precipitously. In April of this year I produced a video titled “Stanley Black & Decker A Dividend Aristocrat On Sale”, (see link below) and I stand by that video based on the information available at the time. However, things change, and after reporting earnings on July 28 things appear to have changed dramatically for this Dividend King.
As a result, the critical question is whether this is a temporary interruption in a great business or a permanent impairment. Put another way, has Stanley Black & Decker now become an incredible long-term opportunity or are we now looking at a value trap? I think the answer depends on your time horizon. In other words, I do not think investors could prudently expect immediate gratification from investing in Stanley Black & Decker today. On the other hand, if you are looking to the future, as I believe investors should, that this could be a rare opportunity to invest in a quality dividend growth stock at an attractive valuation.
I believe this is important, because I also believe that you make your money on the buy side. Our economy has clearly entered a recession. Industrial stocks like Stanley Black & Decker have historically suffered during the recessionary periods. On the other hand, once the economy recovers, the company has a long history of recovering as well. The one thing that I like most about this company and its management team is their long-term commitment to rewarding shareholders through dividends and currently share buybacks. In my opinion, this management team is keenly aware of the importance of their dividend streak. Therefore, I believe if it is at all possible, this company will maintain its incredible dividend growth streak. Nevertheless, as always, I suggest each investor conduct their own research and due diligence and decide according to their own goals, objectives and risk tolerances.
Here is the link to Stanly Black & Decker video from April:
• Stanley Black & Decker...
Try FAST Graphs for FREE:
www.fastgraphs...
Disclaimer: FAST Graphs is a tool designed to reveal and present information related to financial data and investment metrics. It is not intended to provide specific advice or recommendations. Instead, it offers a comprehensive view of relevant data, empowering users to make informed decisions based on their own analysis. It's your first step to a more comprehensive research and due diligence process. In short, it is a tool to think with. The opinions in this video are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned.
#dividends #stocks #investing
I have a Stanley Black and Decker drill that my Dad used in the 90's, which I use in 2022. Love the brand and their products.
Recession in 2008 cut their revenues in half for 2 years. Currently -$900m TTM FCF.
Current Ratio is below 1. First long term debt is due in 2025, so they have time. But I think they will need it.
I guess they suffer badly from a downturn in the global housing market???
25% downturn in revenues for 2 years was DCF fair value of $83.34.
analyst
I did a DCF and came up with a fair value of $79.75 with a very bearish model assuming 50% downturn in revenues in a potential forthcoming recession for 2 years.
I am a very cautious investor. I am waiting for it to go lower. But this is a bucket list stock for me.
Great insights. What are some other bucket list stocks and FMV, if I may ask?
Yepp, I am also waiting for it to go down to $80.
That's not very promising for sales if people are using stuff they bought 30 years ago.
@@NiceGuyEddy00 it doesn't get used very often LOL!! 🤣🤣🤣
@jayfreedom Hey Jay. As Clint said, great insights on this stock. Can you let me know also what other dividend stocks are on your bucket list along with their fair value? Thanks!
I'd be really interested to see your full portfolio Chuck. We've heard bit and pieces of what you own but would be cool to see the full picture.
I just started a small position. Holding for life.
They’ve been absolutely hemorrhaging share to TTI for years especially in commercial markets. Their craftsman strategy has lost steam and they are sitting on several dormant brands that they really don’t know what to do with- Irwin, Black and Decker, Porter Cable, etc. As far as I can tell, the only strategy their C Suite execute on consistently is cost cutting. Go back and read their conference call transcripts from the past 10 years. Every January, more cuts. And they just announced another $1 billion in cuts. We know where this is going
Hey Chuck, really hope you get to read this: in one of you’re last videos you asked us to ask for interesting topics concerning investing, rather than asking to see specific stocks. I highly welcome this suggestion and have an idea you might be interested in as well: I would like to learn more about moats and how they affect long term success of a company, its fundamentals and also how they might earn higher valuations and multiples. I would consider companies like DIS, CMCSA, UNP, CSX, BLK, ASML as businesses with big moats but I’d be really curious to see what you’d come up with :)
Keep up the great work! :)
SWK fell as low as $76.67 on 23rd September, compared to $94.04 when the video was made. Quite a surprising slide. I took the opportunity to buy some more shares, but I must admit I had reservations that the market was seeing something I wasn't.
Another great lesson. I have a small position of the stock and is slightly above current level. I do intend to add some (will be less than 100 sh total) if it comes down some. Thanks again, Mr Valuation. I think we all appreciate very much for this series of great lessons.
I just looked up the fastgraph video of 6 months ago indicating a fair value based on analyst estinates. Here yiu can clearly see how much deviation there can be. A strong come back is possible but only if the downturn/inflation is swift which i doubt. I did pick up the stock at 94 but only buy more at march 2022 lows.
Chuck: Appreciate New Format
- Demonstrating Due Diligence;
* been a Subscriber for Several Years;
* Now using FASTgraphs to Teach Son & Nephew
* Hello Polly and Julie, thanks for your Support!
Thanks for covering this. I am hesitant to invest because they have a lot of debt with inconsistent cash flow. A comfortable margin for debt servicing assumes their record FFO year of 2019. To me, that creates a big risk of buying into a credit down grade (debt trap) unless FFO returns to 2019 levels (which is not a given). Additionally, I want to understand their exposure to China for both manufacturing and sales. Right now, I am thinking that LOW is a better choice and seriously considering it. I compare it to SWK because they sell tools and building materials.
Nice suggestion. I bought swk right after the big drop. Stuck with it for now.
Absolutely part of the Lowe's deal. Sherwin Williams PPG lumber etc. But look at it this way.... Swk has corrected more than Lowes. If the connection is accurate, then Lowe's will join them in the toilet.
@@patricksapp8034 I think you are right about being too early to buy. But, IMHO, LOW is a much better managed and financially sound business. Their numbers are solid and prove they put shareholders first.
@@johns512 no argument Lowe's is a better company. But their is some mutually assured destruction here. Their is no scenario where Lowe's does well and tools paint and lumber go in the trash. If black and Decker.... Which makes porter Cable and most of the tools Lowes carries.... Is in the toilet. Lowe's is right behind them.
Excellent, I was analysing it today and was confused with the estimates and the long term growth tabs on the tool
Hello Chuck :) When it comes to covering the stock market, your channel is certainly my favorite on TH-cam 😃 Thanks so much for your thoughtful analysis and for covering the different aspects of value investing. I am looking forward to your next videos!
Excellent analysis Professor Chuck. Evidently, some of the commenters do not understand the concept of value investing. When it comes to power hand tools, SWK is the 800 lb. gorilla in the space, and management clearly has the ambitious objective of becoming the 1000 lb. gorilla... I am pretty careful about investing in companies that stumble. But, I think from a macro, longer term perspective SWK offers a favorable risk/reward ratio. I appreciate your work in sharing your thoughts with your viewers and FAST Graphs subscribers.
I just started nibbling the other day. Not the same company, but they have kinda went on the "Peleton Ride". They were part of the stay at home home improvement crazy. Lowes home depot paint lumber..... And tools to do it with. The difference between them and Peleton is that when those tools wear out..... People will replace them.
SNA might be a good "hedge" to buy along with SWK. Love the green shirt! Green is my favorite color! FastGraphs is giving me more and more green.
I've done a couple of buys the last few weeks. I may pick up some more. So many good companies are on sale right now!
Another epic brass tacks breakdown by the goat 🐐👍👏🙌☝️ Mr. Valuation 🙌👏
Great video. Thank you. Accumulating slowly planning to keep it for years to come.
I'm looking at my FastGraphs... BBY is kinda looking like a similar story as SWK, a little higher yield and recent divi growth is better, but the long term dividend growth winner goes to SWK. Looks like BBY had a dividend cut, but I'm wondering if a special dividend threw things off?
Good day, Mr. Carnevale. Thank you for the update on SWK. Can you do an update on Medifast - they reported earnings and got a beating yesterday. You have made a video on Medifast a year ago naming it the fastest growing dividend of a dividend growth stock. Maybe it will be suited for your next upcoming videos. Thanks a lot for your wisdom!
Thanks Chuck. Lots of the Kings are on my watch list. I bought some and have averaged down. If it comes close to $83 I'll be loading up.
We appreciate you.
Thanks Chuck. Great video. Was looking to add this company and this video was perfect timing
Hello, what do you think about Makita in japan and Einhell in Germany when you compare these 3 Stocks? LG Andreas from Austria
$88 if general market weakens. Expecting 60% write-off from highs just like in 2009.
thanks Chuck! very, very interesting. What amazing software you have built - GREAT
I think it's a buy. These factories are having trouble finding workers I think it will get better
Thanks Chuck. Do u have an analysis of CAT after earnings?
Can't wait for the growth + dividend video !
Good co just need the price to drop a bit more to be interesting
Hey Chuck! Nice Shirt! Here in Australia SBD are up against Ryobi who have an entire ecosystem of tools and other products that can use a single battery type. I just thought I would share my market observations in Asia Pacific. SBD with such a dividend history makes it attractive. A great company at a fair price? Cheers!
This is a fantastic analysis, thank you for sharing your wisdom.
Subscriber request : I’d love to see what you think of
Morgan Stanley MS
Growing dividends
7.68% earnings yield
Awesome, long awaited since the drop, thank you very much about insights
Total Debt (mrq) = 11.59 Billion with market cap at 13.844 billion according to Yahoo! finance. It would be a shame if this company went out of business due to debt. Stanly and Lufkin were the only companies that gave certification that there tape measures would break before they would fail ISO 9001 requirements. Our company pays a starting fee to keep ISO certified of $50,000/year.
I just subscribed to fastgraph, I love the tool so far 👍
thanks and welcome to the family. Regards, Chuck
Thank you for the analysis...always helpful.
Thank you Chuck for the SWK update👍!
awesome timing !
thanks for the video.
can you compare the 2 med tech giants medtronic & abbott lab. it'll be an interesting comparison.
Hey, Chick, great analysis as always, thank you! Are you buying at these levels of $72 ?
I will Start a Position but wait for now.
I am now in Florida for my Holidays.Have not much time to look.
Greetings from Germany at Moment in The great State of Florida
You're in Chuck's backyard, Sven. Maybe you can get an appointment with him and get a peek at his crystal ball.😉
@@leopfeffer2419 eating at Moment at Cracker Barrel beetwen Miami and Orlando.Iam Stuffed lol(picked Country Fried Chicken)
Their participation in the healthcare market is key. Otherwise, it is impossible to go back to the 2019 consumer driven economy because of declining demographics.
Hello Chuck, could you possibly do a valuation on TEX(Terex) and PNR(Pentair)? Just a suggestion. Thank you for the great information and platform.
Thank you for updating us on SWK. My brother and I are both buying small amounts. Could you please do an update on VTRS?
I'm so tired of SWK making excuses about supply chain problems.... I did NOT read any news releases about Snap on Tools stock crashing due to "supply chain problems.." Might be time for SWK to figure out if they are putting out the best product possible...
SWK or BEN /ORI
Ryobi, DeWalt, Milwaukee, Skill....so much competition in this space. Wouldn't go anywhere near it....
Dewalt is owned by sbk,
@@seanmcbride8516 You're right...my bad🙂
margin in a downward spiral due to competition and high debt . I see more risks than opportunities.
This is a great video, thank you so much!
I love this channel.
If I messed up in my job like this management did I would be fired.
Thanks for the content. Could you please analyze some pharma stocks ?
Nice job 😊
Nobody would buy this now if it wasn't a dividend king. It's not exactly a too cheap to ignore type of bargain. Too much risk for my taste
+ their insane adjusted earnings numbers vs gaap.
I prefer healthy companies like Fastenal and Illinois Tool Works. B&D should suspend dividends to come back and finance the recovery plan. Dividend is not covered by earnings anymore.
Div payout ratio is 36%
1. Define "healthy."
2. Today's "healthy" is tomorrow's sinkhole. The world isn't static, as such naive statements imply.
3. Dividends are paid from cash flow (free cash flow, specifically), not earnings.
@@puppypuppy1448 Heatlhy in nearly every situation and environment even big and long recessions. Fastenal ist a good example for a great balance sheet. Black and Decker: shrinking margins, fast rising debt, negative debt repayment power.
Yeah.... But you can't convince me that Fastenal and Illinois are not still way overvalued.
Oof, i bought SWT instead of SWK by accident. Both are Stanley Black and Decker
Thanks for covering this stock and I just started accumulating from 117 so I am down but going slow in adding more.
I started buying at ~106 and i am planning on adding more. I think its a quality stock, so lower price just means higher upside potential and a higher yield.
Thank you so much, Chuck. I really appreciate all that you've been teaching me.
Thanks Chuck! I frequently stumble over SWK but could not make up my mind. Too many business, to much in-and-out and not a clear line, along with all the well chosen words in the report... I worked for a US company in Germany for 30 years. Most of the words have little meaning beyond the day of publication. I'll stick to calculating fair value based on FCF. That's always my fall back position 🙂
Thank you Chuck for your insight on SWK. I also hold a small position and confident in their future prospects and do not plan on selling. I will watch closely and adjust from there. I think watching your review and giving your opinion will give some of us a little comfort given your expertise. Thank you always for putting out these videos.
The true long term mindset is one absolutely critical advantage that individual investors can have over Wall Street pros that have career risk if their portfolio underperforms for a quarter. Great video and message about having a several year holding period if not longer!
Thanks for content chuck, it a buy for me I’m holding forever unless something changes in the company .
Hey Chuck what are your thoughts on Viatris?
I was looking at whether or not to add to my position this morning. Great timing! Thank you for another helpful video.
I kinda liked it, till i show their debt/Ebitda level! Dont you think it is a risk?
I've had this on my watch list for a while, but it hasn't made it to my buy level. Thank you
Hi Chuck, I agree with your implied point near the end of the video that this might be a good time to sit back and watch for awhile and see how things "settle out" before making a move one way or the other. My question with so many of these things is always how reliable the forecast data might be considering a lot of unusual events in the last few years and the impacts they might have.
I am not questioning the quality of their products, which I like a lot, but that alone won't necessarily make the company successful. Lots of other things going on that are going to be really hard to predict.
In my case, I will carry SWK on my list for awhile and see how things go.
It can be hard to sit back on an apparent bargain, but my personal experiences have taught me to be careful at times like this.
GLTA.
Thanks Chuck. Can you please take a look at ESRT and WY for your next video?
SWK looking great at these levels. Going to keep loading up, it's my largest position.
lmao.....black and decker from the "Troll" portfolio
Opened at 105 and DCA down for long haul.
Thanks, great content as usual!
Is that top from the Master Golf Tournament? If so, I'm jealous :)
YES
Thanks again Chuck for your videos. Question: What is your opinion of the ratings (SA authors, Wall Street and Quant) on Seeking Alpha?
short-term thinking
@@FASTgraphs Thank you. I find that answer very helpful.
Love your videos Mr. Carnevale! Thanks so much for sharing your knowledge. The problem with the videos is that there are too many good options to pick from! LOL!
Thanks again for your great and as always valuable information!
what a great short!
A company that cut its original 2022 forecast by 60% should not deserve a 15 pe, actually this company in recessions traded often at 7-8 PE, even in good times it traded at 10-12 times earning in the past. Give it a 10 PE and this is 50-60 dollars stocks with the new guidance. Where is you beloved margin of safety? Now you don't need it anymore?
a company that has increased its dividend for 55 consecutive years and counting. seems like a good margin of safety for me!
Any company that shuts down there Russian business for a war we started, really makes me think they have serious management problems
✅️