Stanley Black & Decker Q4 EPS Beats by 10% While Revenue Drops 1%
Stanley Black & Decker’s Q4 adjusted EPS of $1.41 beat estimates by $0.13 while revenue fell 1% to $3.7 billion on a 7% volume drop offset by 4% pricing and 2% forex gains. Gross margin jumped 210 bps to 33.3%, and 2026 adjusted EPS guidance is $4.90–5.70 with $700–900 million free cash flow.
1. Q4 Earnings Outperform, Sales Decline
Stanley Black & Decker reported fourth-quarter adjusted earnings per share of $1.41, surpassing the consensus estimate of $1.28, despite revenue of $3.7 billion missing forecasts of $3.78 billion. Sales fell 1% year over year, with organic revenue down 3%, driven by a 7% decline in volumes in North American retail channels. These headwinds were partly offset by a 4% price increase and a 2% favorable currency impact. Shares traded lower in premarket activity following the release.
2. Margin Expansion and Cost Savings
Profitability improved sharply as adjusted gross margin expanded by 210 basis points to 33.3%, reflecting disciplined pricing actions, tariff mitigation efforts and supply chain cost reductions. SG&A expenses fell to 21.5% of sales on an adjusted basis, down 100 basis points year over year. Operating cash flow reached $956 million in the quarter, producing free cash flow of $883 million. Since mid-2022, the company’s Global Cost Reduction Program has generated $2.1 billion of annualized pre-tax savings, reinforcing operational leverage.
3. 2026 Guidance and Balance Sheet Actions
Stanley Black & Decker outlined 2026 adjusted earnings per share guidance of $4.90 to $5.70, implying 13% growth at the midpoint, and free cash flow expectations of $700 million to $900 million. The company will close the $1.8 billion cash divestiture of its Consolidated Aerospace Manufacturing business in the first half of 2026, with net proceeds of $1.525 billion to $1.6 billion earmarked for debt reduction. This transaction, combined with robust cash generation, supports the company’s strategy to strengthen the balance sheet and fund shareholder returns.
4. Full-Year 2025 Performance Highlights
For the full year, net sales totaled $15.1 billion, down 2%, with adjusted gross margin of 30.7%, up 70 basis points, and adjusted earnings per share of $4.67. Full-year free cash flow was $688 million, enabling $240 million of debt reduction and $500 million of dividends. Segments delivered mixed results: Tools & Outdoor sales declined 2% with margin up 340 basis points to 13.6%, while Engineered Fastening sales rose 6% with margins up 140 basis points to 12.1%, driven by aerospace and automotive demand.