Can Stanley Black & Decker Stock Drop From Here?
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Stanley Black & Decker (SWK) stock has returned 77.9% over the past twelve months, compared with 13.1% for the S&P 500. Buyers at today’s price are counting on the maker of DEWALT and Craftsman tools to keep its higher margins and grow its sales again. Yet its third-quarter results on November 4 got a lift from tariff refunds that management says will not last. So how much of that quarter’s profit came from the refunds?
How Much Of Stanley’s Third-Quarter Profit Came From Refunds?
During the November 4 call, management said tariff refunds, net of related costs and reinvestments, added $0.67 to Stanley’s third-quarter adjusted earnings of $2.31 a share. For the tools and outdoor segment, those refunds accounted for about 430 basis points of the 560 basis point rise in adjusted segment margin.
Even so, management says Stanley’s margins improved without the refunds. Adjusted gross margin was above 35% with or without them. Apart from the refunds, its year-over-year improvement came mostly from productivity gains and a better product mix.
Management expects gross margin for 2026 to finish a little above 34%, with about 150 basis points of that from refunds. For 2027, it aims for gross margin at or very close to 35%. So management’s 2027 aim is above what 2026 would be without the refunds.
Is Stanley Selling More Tools?
Stanley is selling more tools by volume, though its reported sales slipped in the third quarter. In tools and outdoor, organic revenue rose 4% in that quarter. Volume grew 7%, while prices were 3 points lower. Power tools organic revenue rose 10%, while outdoor products fell 12% in a season hurt by weather.
Stanley reported third-quarter revenue of $3.73 billion, down 0.65% from a year earlier. That drop happened partly because the company sold its aerospace fasteners business earlier in 2026 and moved its gas walk-behind mowers to a licensing model. Over the past three twelve-month periods, Stanley’s revenue shrank an average of 1.7% a year, while S&P 500 revenue grew 6.5%.
Management expects fourth-quarter sales of about $3.6 billion, held flat overall by the businesses Stanley has sold or licensed, even with organic sales up 2% to 4%. Taken together, Stanley’s organic growth comes mostly from power tools, while its total sales stay close to flat.
What Buyers Of Stanley Stock Are Paying For
Stanley stock trades at 20.4 times its earnings over the past twelve months, a little below the 22.3 times for the S&P 500. Management says the tariff refunds are reflected in its results, so those earnings include them. On the November 4 call, management raised its 2026 adjusted earnings forecast to $5.95 to $6.25 a share. Of the $0.60 rise at the midpoint, $0.55 came from refunds received in the third quarter. That is the change to the full-year forecast after related costs and taxes, not the amount the refunds added to third-quarter earnings. Management said a meaningful part of the costs tied to the refunds already received will land in the fourth quarter. So a buyer at today’s price is paying for profits the refunds made larger.
Stanley’s costs are also rising. Management said on the call that inflation has grown over the past three months, particularly for steel and electrical components. It said the company will have meaningful inflation to address in 2027. It plans to meet that with productivity measures and a price increase, likely around the turn of the year.
Stanley’s sales volumes are growing, led by power tools. Its margins are less settled, with the refund benefit ending and costs rising in 2027. Stanley is expected to report its fourth-quarter results in February 2027, and its gross margin is the number to watch in that report. Management expects adjusted gross margin of 34% to 35% for the quarter. A result in that range would support its view that margins can keep rising from a year earlier without the refunds, even though the range sits below the third quarter’s level. A lower one would not.
Not Sure Stanley Black & Decker Is Worth It At This Price?
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