Stanley Black & Decker (SWK) is a manufacturer of industrial tools, household hardware, security products and locks founded in 1843 year. Current company is the result of merger between Stanley Works and Black & Decker conducted in 2010 year.

Split of sales is presented below:


If we look on sources of growth it is really not impressing for me.


Guidance for 2016 is OK, but nothing special – 3% EPS growth is to be found in many Dividend Aristocrats.


Weakening of USD, which happened in last weeks is favorable for company.


As it comes to financials (estimates):

Market cap ~ $15.4B

Net debt ~$3.5B

Payout ratio ~35%

Beta = 1.44

Dividend yield 2.2%


Estimated valuation ratios:

EV/EBITDA = 10.7

P/E =16.5


Stanley Black & Decker is one of The Dividend Aristocrats paying increasing dividends since 1968 year (2 years more to be The Dividend King). Moreover company is paying dividends fromaround 140 years. Awesome performance. Currently dividend yield is around 2.2% – rather low, as historically company was paying even up to 4%.


Drawdown risk analysis:


SWK share price is around all time high levels – it is not interesting for me. Valuation is quite demanding and growth is 3% on EPS (official guidance midpoint). I think that levels around $80 would make me feel that investment is with good gain to pain ratio. Why anyone is buying now? Is anyone expecting company to be traded like P/E = 20?


Summing up, SWK is an awesome example of long-term growth story, but I see no point in buying at current levels…


Disclosure SWK – no position