Stanley Black & Decker, Inc. (SWK) Earnings & Analysis

Latest quarter

Stanley Black & Decker reported Q2 FY2026 revenue of $4.0 billion, compared with the consensus of $3.9 billion, while adjusted EPS of $1.57 compared with the consensus of $1.20. The company reported diluted EPS of $2.33, versus $0.67 in Q2 FY2025.

The filing shows revenue rose 0.39% from a year earlier as volume growth and foreign currency benefits were partly offset by the CAM business divestiture and strategic outdoor product-line transitions. Tools & Outdoor revenue increased 3%, while Engineered Fastening revenue declined 18% following the CAM divestiture, although its organic revenue increased 3%.

Stanley Black & Decker reported gross margin of 33.0%, versus 27.0% a year earlier, and operating margin of 14.1%, versus 2.71%. The filing attributed the gross-margin change principally to operational cost improvements, favorable product mix and tariff refunds. Free cash flow was an inflow of $698.2 million, compared with an inflow of $134.7 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chris Nelson said total revenue was in line with the prior year and organic revenue rose 3%, led by volume in U.S. retail and commercial and industrial channels within Tools & Outdoor. He said Tools & Outdoor revenue was approximately $3.6 billion and that power tools organic revenue increased 8%, while outdoor organic revenue decreased 7% as fewer replenishment orders followed weather-related demand softness. Nelson said North American organic revenue increased 4%, Europe declined 2%, and the rest of the world increased 3%.

Nelson said the company was directing investments toward markets with growth prospects, including the U.S. commercial and industrial channel. He said annual sales through that channel were expected to approach 10% of Tools & Outdoor sales in 2026, assuming roughly double-digit organic growth. In Engineered Fastening, Nelson said automotive systems and fasteners grew at a low-single-digit organic rate and global industrial markets delivered high-single-digit organic growth; he identified solar and data-center-related applications as areas of industrial strength.

Hallinan said full-year adjusted gross-margin expansion was expected to be driven by productivity, pricing and product mix, with tariff refunds adding to the forecast but related growth investments flowing through SG&A. He said persistent inflation in battery metals, tungsten, oil and oil derivatives was offsetting a temporary lower-tariff-rate benefit in the company’s 2026 assumptions. He also said a price increase appeared more likely than not to be necessary by 2027.

On the call, analysts asked whether promotional activity contributed to Tools & Outdoor volume growth; Hallinan said the company did not have a quantified measure of that effect and described promotional adjustments as responses to product-level elasticity. Analysts also asked about underlying second-quarter performance, and Hallinan said operating results were largely in line with internal expectations, with sales and adjusted gross margin slightly ahead. Nelson said possible future tariff refunds were not included in guidance because their amount, timing and receipt remained uncertain.

Guidance

Stanley Black & Decker raised FY2026 GAAP EPS guidance to $4.60–$5.45 from $4.15–$5.35. The company raised FY2026 adjusted EPS guidance to $5.20–$5.80 from $4.90–$5.70. It also raised FY2026 free-cash-flow guidance to $600.0 million–$800.0 million from $500 to $700 million, incorporating the second-quarter tariff refund and projected CAM divestiture taxes and fees.