SWK pitch:
– Leading global manufacturer of hand, power, and outdoor tools that sell under the brand’s Craftsman, DeWalt, Stanley, and Black and Decker.
– 2022 was a very challenging year with overstocked distributors and home centers as well as poor integration of acquisitions done by the prior CEO.
– Tools EBIT margins went from a pre-COVID 15-16% down to 9% in 2022.
– Demand and margins are expected to normalize in 2024.
– With ongoing de-stocking, SWK is expected to release $2.5bn in working capital which they will use to reduce debt and repurchase shares.
SWK valuation:
– Traded at 17-20x PE pre-COVID.
– With $7.15 EPS in 2024, which is still 30% below pre-covid, and a 17x multiple would be $125 stock.
Exp. gain: +40% to $125/share by 2024.
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/STANLEY_BLACK_andamp%3B_DECKER_INC/0958783203