Stanley Black & Decker, Inc.

This is our first report on Stanley Black & Decker, one of the largest global manufacturers of tools and engineering systems catering to a wide variety of industries. The company delivered an all-around beat in its last result and has been making significant progress toward narrowing its focus and overhauling its supply chain in recent times. Although the macroeconomic environment is challenging, with fragile North American and European consumer markets and persistent cost inflation, there have been some relative bright spots, including the continued strength of professional construction and industrial customer demand, as well as the slow but steady progress in releasing global supply chain constraints. Their efforts to ease semiconductor restrictions are moving forward as anticipated and are impacting results through their increased fill rates and marginally higher organic revenue performance. They are also well-positioned for providing robust merchandising support across all key brands and categories thanks to their improved supply situation, with most of the stock already being dispatched to their clients. The management believes that actively lowering inventory in a rapid, disciplined manner is the best course of action and will help them to achieve future growth and margin improvement. We initiate coverage on the stock of Stanley Black & Decker with a ‘Hold’ rating.