Stanley Black & Decker (SWK) CEO Don Allan thinks new Trump tariffs could hammer his tools giant.
“I’ve also spent time with our team talking about, OK, when something is announced, we want to be doing pricing actions with our customers of some magnitude. And so we’ve actually started to have some of those conversations with our channel customers in the last week or two,” Allan told Yahoo Finance (video above).
“We won’t do anything until we see something that says here’s what the new world of tariffs is going to be.”
Allan said he’s been spending time with politicians and people close to the incoming Trump administration to help them understand the impact of potential tariffs.
Despite the tariff threat, Allan and his team presented upbeat long-term guidance at an investor day in New York City on Wednesday.
The company outlined a fiscal year 2027 sales target of $16.5 billion to $17 billion. Analysts are looking for full-year sales of $15.26 billion for 2024.
Operating profits for 2027 are projected to be about $2.5 billion. Wall Street is modeling for $1.6 billion in operating profits for this year.
Added Allan on tariffs, “When I look at our industry, if I took our Chinese operation that we have today that makes power tools and brought it over in the US, the cost to make that product would be about 60% to 70% higher. So it’s substantial, which the consumer will not pay for. And so if we’re going to reduce our China exposure, which we are, we’ll be looking at other southeast Asian countries like Vietnam or maybe Mexico, where we certainly have a significant operation already.”
Any proposed tariffs on China or Europe would come at an inopportune time for Stanley Black & Decker.
Shares of the company are down 11.8% year to date, compared to a 23% advance for the S&P 500. Its earnings results have been pressured by consumer weakness impacting do-it-yourself home projects at major retailers Home Depot (HD) and Lowe’s (LOW).
In the meantime, housing demand remains choppy amid high prices and high mortgage rates.
Stanley’s third quarter sales fell 5% from a year ago. Sales fell 3% in the Tools and Outdoor segment and by 18% in the Industrial segment.
The company struck a downbeat tone on business trends through early 2025 when it reported in late October. It sees sales in the first half of 2025 being flat to down year over year.
The forward price-to-earnings multiple on Stanley Black & Decker is now 14 times, below the five-year mean of 20.1 times, according to Yahoo Finance data. The S&P 500 trades on a forward price-to-earnings multiple of 22 times.
