Stanley Black & Decker, Inc. SWK is poised to benefit from its cost-reduction program, which is expected to aid the bottom line and drive margins. The program comprises a series of initiatives to resize the organization, reduce inventory and optimize the supply chain for pursuing sustainable long-term growth.

Since its inception in mid-2022, this program has generated roughly $1.4 billion in pre-tax run-rate savings and reduced inventory by more than $2 billion. The company is expected to generate pre-tax run rate savings of $2 billion by the end of this year, with an adjusted gross margin of more than 35% in the long term.

Stanley Black remains open to divesting its non-core operations to focus on its core businesses and drive growth. For instance, in April 2024, the company divested its STANLEY Infrastructure business to Epiroc AB for a cash consideration of $760 million. The divestment will help the company to reduce debt and support capital-allocation priorities.

SWK remains committed to rewarding its shareholders handsomely through dividend payouts. In the first nine months of 2024, the company used $367.2 million for paying out dividends, reflecting an increase of 1.8% year over year. Also, in July 2024, the quarterly dividend was hiked by a penny to 82 cents per share.

However, the company has been witnessing lower consumer outdoor and do-it-yourself market demand. Within the Tools & Outdoor segment, the power tools business has been subject to a slowdown in the industrial sector. The weakening automotive end market, owing to headwinds in the global automotive OEM light vehicle production, is another setback.

SWK Stock’s Price Performance

Image Source: Zacks Investment Research

In the past month, this Zacks Rank #3 (Hold) company's shares have lost 5% compared with the industry’s 7.8% decline.

High debt levels remain another concern. Exiting the third quarter of 2024, the company’s long-term debt remained high at $5.6 billion. Its current maturities of long-term debt totaled $500.2 million. Also, its cash and cash equivalents at the end of the third quarter were $298.7 million, lower than the short-term borrowings of $387.4 million.

Key Picks

Some better-ranked stocks from the Zacks Industrial Products sector are discussed below.

Generac Holdings GNRC presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company delivered a trailing four-quarter average earnings surprise of 10.8%. In the past 60 days, the consensus estimate for GNRC’s 2024 earnings has increased 0.6%.

Alarm.com Holdings ALRM currently sports a Zacks Rank of 2 (Buy). ALRM delivered a trailing four-quarter average earnings surprise of 19.6%.

In the past 60 days, the Zacks Consensus Estimate for ALRM’s 2024 earnings has increased 7.2%.

Applied Industrial Technologies AIT presently carries a Zacks Rank #2. AIT delivered a trailing four-quarter average earnings surprise of 5%.

In the past 60 days, the consensus estimate for AIT’s 2024 earnings has inched up 0.2%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Stanley Black & Decker, Inc. (SWK) : Free Stock Analysis Report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

Generac Holdings Inc. (GNRC) : Free Stock Analysis Report

Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research