The most recent earnings announcement Stanley Black & Decker Inc’s (NYSE:SWK) released in September 2017 indicated that the company experienced a small tailwind, eventuating to a single-digit earnings growth of 6.80%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Stanley Black & Decker’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Stanley Black & Decker

Analysts’ outlook for this coming year seems rather muted, with earnings increasing by a single digit 5.43%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 15.04% compared to today’s earnings, and finally hitting $1,515.4M by 2021.

While it is helpful to be aware of the growth rate year by year relative to today’s level, it may be more valuable analyzing the rate at which the business is moving on average every year. The pro of this technique is that we can get a bigger picture of the direction of Stanley Black & Decker’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 7.92%. This means that, we can assume Stanley Black & Decker will grow its earnings by 7.92% every year for the next few years.

Next Steps:

For Stanley Black & Decker, I’ve put together three fundamental aspects you should look at:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

2. Valuation: What is SWK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SWK is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SWK? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.