STANLEY BLACK & DECKER, INC. (SWK): what the price requires

At today's price, STANLEY BLACK & DECKER, INC. (SWK) is priced for +10.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/SWK

Headline

FieldValue
TickerSWK
CompanySTANLEY BLACK & DECKER, INC.
Sector / IndustryIndustrials
Current price$86.56/sh
CompositionTools & Outdoor 87% / Engineered Fastening 13%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Implied growth10.7%
Multiple paid14x operating income

Solve inputs: computed at a 10.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~4.8%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.18σ
cohort percentile (of 225 peers)15
sustained it ~5 years at this level53%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset4.20x4expensive
Earnings3.28x5expensive
Relative1.53x4expensive
Growth1.29x5expensive

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.6%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$36.202.39xyesFCF base $0.7B, growth -0% (input: historical growth), terminal g 0.5%, WACC 6.6%, 5yr projection
DCF Exit MultipleGrowth$79.441.09xyesExit EV/EBITDA: 37.0x / 39.0x / 41.0x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$40.922.12xyesP/E 23.27x (blended: static sector reference 18x + trailing (TTM) 36x), scenarios: 19.7x / 23.3x / 26.9x (bear / base = reference held flat / bull), EV/EBITDA 20.09x
Simple DDMGrowth$67.321.29xyesDPS $3.31, g=4.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$117.290.74xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$26.333.29xyesBV/sh $58.91, ROE (TTM) 4.1%, ke 9.3%
Two-Stage Excess ReturnAsset$16.955.11xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$55.571.56xyesRev $15.2B, growth -0% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$29.282.96xyesEPS $2.44, growth 2% (input: historical EPS growth), PEG=17.77 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$32.152.69xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.04B × (1−30%) / WACC 6.6% → EPV (no growth)
Residual IncomeAsset$13.926.22xyesBV $58.91 + 5yr PV of (ROE (TTM) 4.1% − Kₑ 9.3%) × BV; BV grows 2.7%/yr
Graham NumberAsset$56.871.52xyes√(22.5 × EPS $2.44 × BVPS $58.91) — Graham's conservative floor
EV/EBITDA RelativeRelative$0.018656.00xyesEBITDA $0.50B × sector EV/EBITDA 12.0x (excluded from median)
FCF YieldEarnings$11.007.87xyesFCF $725.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$4.9117.63xyesSBC-adj FCF $0.64B (FCF $0.73B − SBC $0.09B) capitalized at Kₑ
Ben Graham FormulaEarnings$78.731.10xyesEPS $2.44 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$249.890.35xyesRevenue $15.23B × sector P/S 2.5x
PEG Fair ValueRelative$91.500.95xyesEPS $2.44 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$26.383.28xyesEPS $2.44 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-2.0%
Burning cashno

Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.

Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.

Bullet Takeaways

Bull Case

What trailing numbers miss about Stanley Black & Decker is that the income statement is still wearing the costs of a turnaround while the recovery is already reporting in. GAAP earnings of $2.44 per share over the trailing year describe a company mid-surgery: restructuring, supply-chain rebuild, tariff mitigation. The first quarter showed the post-surgery run rate instead, with adjusted EPS of $0.80 against a $0.59 consensus and revenue of $3.85 billion topping the $3.75 billion estimate, results the new CEO called ahead of the company's own expectations on both lines. Management reaffirmed a full-year adjusted EPS guide of $4.90 to $5.70, roughly 13% growth at the midpoint, built on approximately 150 basis points of gross-margin expansion this year on the way to a 35%-plus adjusted gross margin by the fourth quarter. If those adjusted earnings are the true forward economics, the trailing multiple the valuation methods are reading is an artifact.

The franchise underneath is not in dispute. The 10-K anchors Tools & Outdoor on "DEWALT®, CRAFTSMAN®, and STANLEY®, supported by a broader portfolio of complementary brands" (accession 0000093556-26-000009), a brand stack with shelf position that peers spend decades failing to replicate, and describes an active tariff playbook in which "the Company is continuing to execute its plan with the objective to safeguard gross margins and position the business for success" (same accession). On the call, management quantified the current environment as roughly neutral: tariff policy changes net out as a tailwind on a gross basis, offset by inflation for the year. A company that can hold guidance flat through a tariff regime change has pricing power showing up where it counts.

Capital allocation quietly supports the story. The share count has fallen about 2% a year over the past four years, the dividend runs $3.31 per share, and the Engineered Fastening segment gives the portfolio a second engine the filing frames around "highly engineered components and automation systems in the automotive, general" industrial markets (accession 0000093556-26-000009), end markets with different cycle timing than DIY tools. The bull case is straightforward: the brands never left, the margin structure is being rebuilt in public on a stated schedule, and the stock is priced off the scar tissue rather than the guide.

Bear Case

Start with what the valuation methods actually say, because for once they agree, and what they agree on is uncomfortable. No family of method reaches today's price. Asset-based approaches land at roughly a quarter of the $88.21 quote, earnings-power reads at roughly a third, peer multiples about 35% below, and even the forward-growth methods, the ones designed to give a recovery credit, sit about a quarter short as a family. When the generous methods and the conservative methods disagree, there is an argument to have; when they all fall short, the price is resting on something none of them can see. The conservative reads are the honest ones here because they measure what the company has actually delivered: a 4.1% trailing return on equity and $726 million of free cash flow against a $13.4 billion market value.

The gap between GAAP and the guide is the whole bet. Trailing GAAP earnings run $2.44 per share; the reaffirmed adjusted guide is $4.90 to $5.70. That spread has to close from the GAAP side for the price to work, and the path runs through a margin plan with external dependencies the company itself catalogs. The 10-K concedes that finding qualified suppliers "in a timely, cost-effective and efficient manner is a significant challenge with the increasing demand from customers, especially with respect to goods sourced from non-U.S. suppliers", and that "increased demand for battery technology may also increase the costs to the Company for both the battery cells as well as the underlying raw materials such as cobalt and lithium" (accession 0000093556-26-000009). Management's own guidance framework assumes new Section 301 tariffs eventually arrive at levels similar to the prior regime, making today's lower rates a temporary tailwind. A margin target built on tariff assumptions is a target the White House can amend.

Meanwhile the balance sheet narrows the escape routes. Net debt of $6.2 billion runs about 4.3 times trailing operating income on a pre-tax basis with interest coverage of 2.9 times, and the $3.31 dividend plus continued buybacks consume cash the deleveraging also wants. The price implies operating profit compounding near 12% a year for five years; only about half of comparable fast-growers historically sustained that for the duration, and this particular company must do it while housing-linked tool demand stays soft enough that revenue guidance was trimmed on timing this year. If the margin march stalls at 33% instead of 35%, the adjusted story deflates into the GAAP one, and the GAAP one is what every method already priced.

Valuation

The distinctive fact about Stanley Black & Decker's valuation is unanimity: at $88.21, every family of method finds the price rich on trailing numbers. Asset-value reads sit at roughly a quarter of the price, weighed down by a 4.1% trailing return on equity against $58.91 of book value per share. Earnings-power methods land around a third of it, reading $2.44 of trailing GAAP earnings and $726 million of free cash flow at face value. Peer multiples come in about 35% light, and the forward-growth family, which is structurally the most forgiving, still sits about a quarter below as a group, with only the most aggressive dividend-growth variant reaching the quote. The price is a bet beyond what any standard frame supports, which in practice means it is a bet on the adjusted earnings guide of $4.90 to $5.70 becoming the GAAP reality.

The embedded requirement is concrete. Today's quote pays about 14 times operating income, implying roughly 12% annual operating-profit growth for five years from a business earning a 9.4% operating margin now, and while that multiple sits in the lower half of the peer range, only about half of comparable fast-growers historically held such a pace that long. The company's own filing supplies the inputs the recovery leans on: the two-segment structure of Tools & Outdoor and Engineered Fastening, the latter serving "end markets with GDP-plus growth profiles", and a stated tariff-response plan aimed to "safeguard gross margins" (accession 0000093556-26-000009). Solvency bounds the downside without threatening it: $6.2 billion of net debt at about 4.3 times pre-tax operating income and 2.9 times interest coverage is manageable for a consumer-brands cash generator but leaves little slack, while the share count falling 2% a year shows management still returning capital through the rebuild. The decisive number is the gross margin line each quarter between now and the fourth-quarter 35% checkpoint; everything else in the price is downstream of it.

Catalysts

The margin checkpoint calendar is the catalyst path. Management has committed to roughly 150 basis points of gross-margin expansion in 2026 and a 35%-plus adjusted gross margin by the fourth quarter, on the way to 35% to 37% by the end of 2028. Each quarterly print between now and year-end is a public reading against that schedule, and the second-quarter report, due on the company's usual late-July cadence, is the next one. The first quarter cleared its bar comfortably: adjusted EPS of $0.80 against a $0.59 consensus, revenue of $3.85 billion against $3.75 billion expected, and a reaffirmed full-year adjusted EPS guide of $4.90 to $5.70 with revenue trimmed slightly on timing.

Tariff policy is the live external variable. Management told investors that updated tariff assumptions net to a gross tailwind this year, roughly offset by inflation, and that the guidance framework assumes new Section 301 tariffs eventually arrive at levels similar to the prior IEEPA regime. Any formal Section 301 action, in either direction, forces a guidance re-mark. The other thread to follow is execution under the leadership transition: CEO Chris Nelson framed the first quarter as a solid start, and his margin plan now owns the 2026 targets his predecessor's restructuring set up. With the dividend at $3.31 per share and the buyback shrinking the count about 2% annually, the capital-return program continues to pay holders while the margin evidence accumulates.

Peer Cohorts (Per Segment, With Filing Citations)

Tools & Outdoor (reported)

Engineered Fastening (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings call, May 2026 · Q1 2026 earnings release, May 2026

View the full interactive SWK report on boothcheck