Should You Be Worried About Stanley Black & Decker Stock?

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Stanley Black & Decker (SWK) stock returned 47.5% over the past year, against 15.0% for the S&P 500. Its margins have recovered too. Operating margin was 9.2% over the four quarters to July 2026, up from 6.7% a year earlier. Yet on its July 29, 2026 call, management said a cost refunded in the latest quarter should return within months. What is that cost, and how much did its refund add to the quarter?

Stanley Black & Decker’s Tariff Costs Are Coming Back

The cost is tariffs. Stanley Black & Decker received refunds of earlier tariffs in the second quarter of fiscal 2026. Management said those net refunds added about 250 basis points to its adjusted gross margin in the second quarter.

That tailwind is ending. Management said in July that new tariffs were likely to arrive within a few months at the same level as the old ones, so its underlying tariff costs would go back to where they were before the refunds. The company is due to update that view with its third-quarter results on November 4, 2026. The company excludes any further refunds from its second-half guidance because their timing and amounts are too uncertain.

Tariffs are not the only pressure. Management said inflation in battery metals, tungsten, oil and oil derivatives remains persistent, and that a price increase appears more likely than not to be needed by 2027. The warning comes from the company itself: the refund that lifted the quarter was temporary, and the other costs have not eased.

How Much Of Stanley Black & Decker Is Exposed?

Sales in that segment have moved little. They slipped 0.5% in fiscal 2024, and management said they rose 3% in the second quarter of fiscal 2026. Management expects the segment’s growth in fiscal 2026 to come from market share gains in a roughly flat to down market.

The stock is priced near its high. It closed on October 27, 2026 just 3.7% below its highest close of the past year. The price-to-sales multiple of 0.98 sits well below its 2021 peak of 2.3, but above its 2022 low of 0.64. Against the market, the shares trade at 24.0 times earnings, above 22.6 for the S&P 500. Those earnings include the second-quarter tariff refunds.

How Worried Should Stanley Black & Decker Holders Be?

The risk is real and close, but it is not a surprise. Management’s forecast for fiscal 2026 already assumes the tariff costs come back. On that basis, the company still raised its adjusted earnings guide to $5.20 to $5.80 per share. It expects productivity and tariff mitigation, including the move out of China, to lift adjusted gross margin to 34% to 35% in the second half. In the second quarter, that margin was 33.7%, including the boost from the refunds.

The shares have fallen harder than the market before. During the 2025 tariff sell-off between February and June, the stock fell as much as 36% from its peak, against 19% for the S&P 500. Today’s price appears to assume that management’s plan to offset the tariffs works.

Adjusted gross margin is the measure to watch when Stanley Black & Decker reports its third quarter, expected in November 2026.

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