Stanley Black & Decker, Inc.

What they do

The company designs, manufactures and sells hand tools, power tools, outdoor products and related accessories, plus engineered fastening solutions. About 62% of 2025 revenue came from the United States, with the rest largely from Europe (16%), emerging markets (13%) and Canada (4%). It operates two reporting segments: Tools & Outdoor (which includes power tools, hand tools and outdoor products) and Engineered Fastening.

Revenue drivers

• Tools & Outdoor — The largest segment, with $3,564 million of second quarter 2026 net sales (about 90% of the quarter's total). Revenue comes from power tools, hand tools and outdoor products sold through U.S. retail and commercial and industrial channels, where volume rose 3% in the quarter.
• Engineered Fastening — The smaller segment, with $396 million of second quarter 2026 net sales and a 13.0% segment margin. It sells fastening solutions, largely to industrial customers.
• Geographic mix — The U.S. is the dominant market at roughly 62% of 2025 revenue. In the second quarter of 2026, North America sales were up 3% total and 4% organically, Europe was flat total and down 2% organically, and Rest of World was up 8% total and 3% organically.
• Licensing transition — The company has moved gas walk-behind outdoor products to a licensing model, which reduced Tools & Outdoor sales by about 1 percentage point in the second quarter of 2026.

Recent performance

Second quarter 2026 net sales were $3,960.7 million, in line with the prior year but up 3% organically, with volume up 3% and currency a 1% tailwind. Gross margin was 33.0%, up 600 basis points versus prior-year adjusted gross margin, including roughly 250 basis points from net tariff refunds; adjusted gross margin was 33.7%. Net earnings were $351.3 million, or $2.33 per diluted share, versus $101.9 million and $0.67 in the prior-year quarter. First-half 2026 net sales were $7,807.1 million and net earnings were $410.9 million. The company reported $763 million of operating cash flow and $698 million of free cash flow in the quarter, and reduced debt by $1.7 billion while executing $250 million of share repurchases.

Strategy

Management's stated mission is to build a world-class branded industrial company, anchored on activating brands, driving operational excellence, and accelerating innovation. It completed a Global Cost Reduction Program at the end of 2025 with about $2.1 billion of pre-tax run-rate savings, above the original $2.0 billion target. The company has divested non-core businesses including CSS, MAS, Oil & Gas and Infrastructure, and in December 2025 agreed to sell its Consolidated Aerospace Manufacturing business to Howmet Aerospace for $1.8 billion in cash. Near-term, it intends to use CAM proceeds to reduce debt. Capital allocation priorities are organic growth investment first, then a strong and growing dividend and opportunistic share repurchases.

Risks

• Supply chain and sourcing concentration — The company imports large quantities of finished goods, components and raw materials and sources materials from South Korea, China, Taiwan and Israel, so regional tensions or conflicts could disrupt supply, raise costs or delay deliveries.
• Tariff and trade exposure — Second quarter 2026 results included roughly 250 basis points of gross margin benefit and about $0.17 of EPS benefit from net IEEPA tariff refunds, so results are sensitive to changes in tariff policy and refund timing.
• Geographic revenue concentration — About 62% of 2025 revenue came from the United States, leaving results exposed to U.S. retail and commercial and industrial demand conditions.
• Divestiture execution — The pending $1.8 billion CAM sale to Howmet Aerospace remains subject to regulatory approval, and the company has a history of portfolio changes including the 2024 sale of the Infrastructure business.

Outlook

Management said second quarter sales, gross margin and cash performance keep the company on track to achieve full-year targets and it raised 2026 EPS and free cash flow guidance. Long-term targets expected in 2028 results, based on the tariff landscape as of January 2026, include mid-single-digit organic revenue growth, 35% to 37% adjusted gross margins with mid-to-high-teens adjusted EBITDA margin, and free cash flow approximating 100% of GAAP net income over a multi-year period. The company also targets low-to-mid-teens cash flow return on investment by 2028 and mid-teens or higher beyond 2028, plus a solid investment grade credit rating.