Stanley Black & Decker shares fall after weak 2019 guidance

At its Q4 and FY 2018 Earnings Conference Call, Stanley Black & Decker gave a not-too optimistic outlook for 2019. And the weak 2019 guidance reflected in the premarket trading, with Stanley Black & Decker shares falling 6.8%.

According to a report on Market Watch, net loss for the quarter totaled $66.7 million, or 45 cents per share, after net income of $281.5 million, or $1.84 last year. Excluding charges, adjusted EPS was $2.11, ahead of the $2.10 FactSet consensus. Restructuring charges were $102.2 million, mostly related to a cost reduction program. Sales totaled $3.63 billion, up from $3.46 billion last year, and exceeding the $3.62 billion FactSet guidance. For 2019, the company expects EPS of $7.45 to $7.65 and adjusted EPS of $8.45 to $8.65. The FactSet estimate is for $8.79. Stanley Black & Decker shares have taken a 22% tumble over the past year while the S&P 500 index SPX, +0.85% is down 5.7% for the period.

Stanley Black & Decker Inc. became the most recent manufacturer to warn investors about a global economic slowdown as the company forecast profit that missed analysts’ estimates. The stock tumbled the most since at least 1980.

According to Bloomberg, the maker of power and hand tools, which counts Lowe’s Cos. and Home Depot Inc. as its largest customers, said earnings this year would be as much as $8.65 a share, missing an average projection of $8.80. The company, which has a long-term organic sales growth target at 4 percent to 6 percent, noted that 2019’s performance would be at the bottom of that range.

The company’s shares closed at $115.69. It was the second worst one-day performer in the S&P 500 Index, after Arconic Inc., which fell sharply after the board decided not to sell the aerospace and auto parts company.

The company’s less-bullish outlook has weight because its business spans several industries, from commercial security systems to engineering fasteners and power tools used by homeowners and construction companies. Plus, about half its revenue comes from outside the U.S.

 “Baked into our guidance is a reality check on slowing markets,” Chief Executive Officer Jim Loree said Tuesday on a call with analysts. “It’s not catastrophic. It’s nothing that we can’t handle. As we enter 2019, the external challenges don’t magically disappear; however, we are well prepared and positioned to tackle them. In addition, there are signs that the global economic growth is slowing, and that the U.S. economy may soon be coming to the end of one of the most enduring recoveries in U.S. history.”