Stanley Black & Decker is a manufacturer of tools, accessories, hardware, security products, and locks headquartered in New Britain, Connecticut. Its history dates back to 1843 and the company operates in more than 100 countries. The company was formed by the merger of Stanley Works and Black & Decker on March 12, 2010. The purpose of the merger was to consolidate sales and increase penetration in emerging markets.
The company
Stanley Black & Decker has built several successful brands, particularly in tools and accessories, where It has a market share of approximately 40% thanks to brands such as Black & Decker, DeWalt, and others.
B&D sales depend on housing activity. The 33% decline in U.S. housing starts in 2008 contributed to a 7% decline in B&D sales that year, and the market continued to stagnate in 2009.
B&D sells approximately one-third of its products to retailers Home Depot and Lowe's. This heavy reliance on two primary customers exposes the company to increased risk of adverse outcomes.
The company's largest markets, North America and Europe, are considered mature. The company has a market share of approximately 401,000 units in these regions and has likely reached market saturation in these major regions. However, the company has room to grow in several major emerging markets, where its market share is still low, particularly in Latin America and Asia. Sales in Latin America, for example, are growing at a double-digit rate.
The company has experienced pressure on gross margins due to rising raw material prices in recent years. The company attempts to hedge against price fluctuations using derivative contracts, but the steady increase in the price of these major inputs over time has led to unavoidable cost increases.
B&D does not have a competitor that competes in all of the company's segments, but it does have several that compete in each segment individually. The company also faces numerous small private-label competitors, especially abroad where its market penetration is far below that of the United States and Europe.
The title
THE long term performance is interesting, with 2.72%. Dividends are growing at an average rate of 7.06, which is okay, but nothing more. On the other hand The history of successive increases in payments is impressive, with 43 years. Le distribution ratio is cautious, with 43.72%, which leaves room for SWK to continue increasing its dividend in the future, even in the event of a difficult passage.
The title displays a volatility certain, with 20.51%, much higher than that of our portfolio, and even higher than that of the market. The beta is also high, with 1.32, demonstrating that the title displays strong sensitivity to market variationsThe stock beats the market over the long term, but only moderately (compared to other stocks in our portfolio).
SWK provides average protection against dollar fluctuations.
Conclusion
The potential income from SWK is attractive, but the risk involved in obtaining it is a bit too high for our liking. We therefore prefer to stay away from this stock for now, but it is worth holding if already in the portfolio and may even be of interest to some more aggressive investors.
Sources: wikipedia.org, wikinvest.com, yahoo.com, swissquote.ch, dividends.chDiscover more from dividendes
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