SWK earnings analysis
What we found in SWK's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Stanley Black & Decker delivered Q2 revenue of $3.961 billion, essentially flat year over year but modestly higher sequentially, while GAAP EPS increased to $2.33 from $0.67 and adjusted EPS reached $1.57. Profitability and cash flow improved substantially: gross margin rose 600 bps to 33.0% and free cash flow reached $698.2 million. Results were aided by a $118 million tariff-refund gain, although management raised full-year GAAP EPS guidance to $4.60-$5.45 and free-cash-flow guidance to $600-$800 million while cautioning that future refunds and trade-policy outcomes remain uncertain. Inventory and receivables balances were not provided in the supplied filing extract.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- EPS surged despite broadly flat sales
- Q2 net sales were $3.961 billion, up $16 million from $3.945 billion a year earlier and up from $3.846 billion in Q1 2026. GAAP diluted EPS rose to $2.33 from $0.67, while adjusted diluted EPS increased to $1.57 from $1.08.
- Gross margin expanded 600 bps
- Gross margin expanded 600 bps year over year to 33.0% from 27.0%; adjusted gross margin increased to 33.7% from 27.5%. Management attributed the improvement to operational cost gains, favorable mix, and about 250 bps of net tariff-refund benefit.
- Tools & Outdoor drove growth and profit
- Tools & Outdoor sales increased 3.0% to $3.5643 billion, with 3% volume growth, while segment profit increased $150.9 million to $389.0 million and margin rose to 10.9% from 6.9%. U.S. retail and commercial-and-industrial power-tool strength was the principal volume driver.
- Fastening profitability improved materially
- Engineered Fastening organic revenue rose 3%, supported by industrial strength and automotive fasteners, and segment margin reached 13.0% from 7.2%. This occurred despite reported sales falling 18.1% to $396.4 million because of the CAM divestiture.
- Cash conversion improved sharply
- Q2 operating cash flow increased to $763.1 million from $214.3 million and free cash flow rose to $698.2 million from $134.7 million, primarily from working-capital changes. Capex and software spending was $64.9 million, or about 1.6% of sales.
- CAM proceeds strengthened liquidity and capital returns
- Cash increased to $592.4 million at July 4 from $280.1 million at January 3, while commercial paper was reduced from $605.6 million to zero. The company used $1.815 billion of CAM-sale proceeds, including $1.750 billion of net commercial-paper repayments in Q2 and $250.0 million of open-market share repurchases.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Tariff refunds materially supported Q2 margin
- Approximately 250 bps of Q2 gross-margin expansion came from the net impact of realized tariff refunds: the company recorded a $118 million pre-tax cost-of-sales gain, partially offset by about $83 million of incentive compensation and growth investments. There is no guarantee that further refunds will be received or equal tariffs paid.
- CAM divestiture reduced reported fastening sales
- Engineered Fastening reported sales declined $87.4 million, or 18.1%, to $396.4 million, as the CAM divestiture reduced sales by 21%. The divestiture also makes reported growth less comparable even though organic revenue grew 3%.
- Trade policy and sourcing risk remains elevated
- The updated trade-policy risk factor notes that the company began shifting certain power-tool production to Mexico in 2025, where products became subject to additional tariffs; it has no guarantee of obtaining a USMCA exemption. Management also expects Section 301 tariffs to approximate IEEPA-equivalent levels in 2026 guidance.
- Restructuring charges and execution risk persist
- The company incurred $60.0 million of restructuring charges in the first half, including $50.0 million in Tools & Outdoor, and recorded $28.0 million of asset impairment charges tied to a product-line exit and plant closure. It expects about $120 million of annual net savings by the end of 2027, leaving execution risk.
- Buyback completion is discretionary
- A new $500 million repurchase authorization had approximately $250 million remaining at July 4 after 3,239,690 shares were repurchased for $250.0 million. The updated risk factor states repurchases are discretionary and may be suspended or terminated, so anticipated shareholder-value benefits are not assured.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $2.33
- Gross margin
- 33.0%
- Segment
- Tools & Outdoor: $3.5643 billion revenue, up $102.9 million (3.0%) year over year; segment margin 10.9% versus 6.9%.
- Segment
- Engineered Fastening: $396.4 million revenue, down $87.4 million (18.1%) year over year following the CAM divestiture; segment margin 13.0% versus 7.2%.
What they said about what is next.
2026 GAAP diluted EPS guidance was raised to $4.60-$5.45 from $4.15-$5.35; adjusted EPS was raised to $5.20-$5.80 from $4.90-$5.70. Free-cash-flow guidance increased to $600-$800 million from $500-$700 million. Guidance excludes CAM after April 6, 2026 and any potential future tariff refunds, and assumes Section 301 tariffs approximate IEEPA-equivalent levels.
The filing reads better than the one before it.
What came before.
- 10-Q · April 29, 2026
- Stanley Black & Decker reported Q1 2026 earnings with net sales of $3.8 billion, an increase of 3% year-over-year but below the estimated $3.75 billion. EPS was reported at $0.39, missing the consensus estimate of…
- 10-K · February 24, 2026
- Stanley Black & Decker reported 2025 consolidated revenues of $15.1 billion and continues to pivot toward a simpler, tools-focused portfolio (Tools & Outdoor $13.2 billion, 87% of revenues) while completing a multi-year…
- 10-Q · July 29, 2025
- Stanley Black & Decker reported Q2 net sales of $3,945.2 million (down $79.2 million or ~2.0% YoY from $4,024.4 million, but up sequentially vs Q1 2025). Gross margin compressed to 27.0% and operating margin was 2.7%…
- 10-Q · July 30, 2024
- Stanley Black & Decker reported second-quarter net sales of $4,024.4 million (down from $4,158.9 million a year ago) and a small operating loss of $22.1 million. The company generated strong operating cash flow of…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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