UPDATE 3-Stanley Black & Decker Q2 beats view, raises FY outlook

* Q2 adj EPS $1.24 vs est $0.78

* Revenue $2.37 bln vs est $2.25 bln

* Raises FY10 EPS view to $3.35 to $3.55

* Shares up 6 pct
(Adds conference call details, updates share movement)

By Bijoy Koyitty and Megha Mandavia

BANGALORE, July 21 (BestGrowthStock) – Stanley Black & Decker
(SWK.N: ) posted strong quarterly results on good demand for its
hand and power tools, and raised its full-year earnings
outlook, sending its shares up as much as 6 percent.

The company, which was formed after Stanley Works bought
rival Black & Decker last year, said both the legacy businesses
benefitted from inventory restocking that boosted volume
growth.

“Given that this was the first full quarter since the
acquisition was consummated, it is encouraging to see the ‘new’
Stanley Black & Decker get off to a good start,” Janney
Montgomery Scott analyst James Lucas said.

For a breakingviews column, click [ID:nN21194414]

By business, margin upside in the second quarter was driven
by better-than-expected volume leverage in Construction and
Do-it-yourself (CDIY) and industrial segments, Deutsche Bank
analyst Nigel Coe wrote in a note to clients.

Sales at the CDIY segment, which accounts for more than
half of the company’s revenue, rose more than four times,
helped by growth in the Americas and Europe.

“Launch of a new line of Bostitch branded hand tools aided
sales and profits in the quarter,” the company, whose brands
also include the Stanley line, Dewalt, Proto and Mac Tools,
said.

Growth in the CDIY segment would primarily be driven by new
product rollouts in the second half of the year, and demand
from emerging markets such as Latin America, Chief Financial
Officer Donald Allan said on a conference call with analysts.

The company said the integration is on track to achieve
cost synergies of $350 million, $90 million of which will be
recognized in 2010.

The synergy targets are being met, new products continue to
hit the market, demand is returning, and cash flow remains
strong, said Montgomery Scott’s Lucas, who has a “buy” rating
on the stock.

Q2, OUTLOOK BEAT

For 2010, Stanley Black & Decker expects earnings in a
range of $3.35 a share to $3.55 a share, compared with its
prior view of $3.10 a share to $3.30 a share.

Analysts on average expect earnings of $3.29 per share, on
revenue of $8.05 billion, according to Thomson Reuters I/B/E/S.

The company, however, said it does not expect inventory
restocking to maintain its pace of growth in the second half of
the year.

The company said it expects low single-digit growth in its
CDIY segment, on a pro forma basis, during the period.

For the second quarter, Stanley reported net income of
$45.8 million, or 28 cents a share, compared with $70.8
million, or 87 cents a share, a year ago.

Excluding items, the company earned $1.24 a share.

Net sales rose 157 percent to 2.37 billion.

Analysts on average were expecting earnings of 78 cents a
share on revenue of $2.25 billion.

Share of the company, an S&P 500 (.SPX: ) component, were
trading up 4 percent at $54.60 Wednesday afternoon on the New
York Stock Exchange.

Stock Market

(Reporting by Megha Mandavia and Bijoy Koyitty in Bangalore;
Editing by Don Sebastian)

UPDATE 3-Stanley Black & Decker Q2 beats view, raises FY outlook