What Could Go Wrong With Stanley Black & Decker Stock?

For Stanley Black & Decker (SWK) holders, the biggest worry is how much of the company’s recent margin gain came from tariff refunds. Management said these refunds added about 250 basis points to the fiscal Q2 2026 adjusted gross margin of 33.7%. With sales up just 0.6% over the past twelve months, margins are where the toolmaker’s recovery shows. So how much of that margin is left once the refunds are taken out?

Stanley Black & Decker’s Margin Without The Refunds

Excluding the refunds, Stanley Black & Decker posted an adjusted gross margin of about 31% for fiscal Q2 2026. Management said productivity and product mix largely drove the margin increase from a year earlier, and the refunds came on top of that improvement.

The refunds may not come again. Management left any second-half refunds out of its guidance, saying the timing and amounts were too uncertain to include. Yet management also said it has conviction in reaching a 34% to 35% adjusted gross margin in the second half of 2026, so the business has to close that distance on its own.

How Stanley Black & Decker’s Margins Compare With 2021

On reported figures, Stanley Black & Decker’s gross margin over the twelve months to July 2026 was 31.9%, compared with 35.8% for the twelve months to July 2021. That gap has been narrowing, although the latest figure includes the refunds: the margin stood at 28.3% over the twelve months to June 2024 and 29.4% over the twelve months to June 2025.

Further down the income statement, the shortfall is wider. Operating margin was 9.2% over the latest twelve months, about half the 17.4% recorded in the twelve months to July 2021. The refunds also showed up in earnings, with management saying they contributed about $0.17 to the fiscal Q2 adjusted earnings per share of $1.57.

Investors are paying for the recovery anyway. At the end of June 2026, the P/E of 22.8 was higher than at 21 of the 34 profitable quarter ends since fiscal Q3 2016, so the price likely assumes margins keep rising. Holders have also seen how far the shares can fall when tariffs dominate the market: in the 2025 US tariff shock, the stock fell 36%, compared with 19% for the S&P 500 ETF.

What Is Going Right At Stanley Black & Decker?

Excluding the refund benefit, management expects the full-year adjusted gross margin to expand by about 150 basis points in fiscal 2026. Demand is also holding up in the main business. The Tools & Outdoor segment brought in about $3.6 billion of second-quarter revenue, and its organic revenue rose 3%, all from volume, with pricing flat.

That makes the refunds a moderate worry for a holder rather than a threat to the recovery, because the second-quarter adjusted gross margin was still up about 370 basis points from a year earlier without them. Stanley Black & Decker’s adjusted gross margin without tariff refunds is the number to watch when the company reports fiscal Q3 2026 results, expected on or around November 4, 2026.

Does This Mean You Should Act On SWK?

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