Research Update: Stanley Black&Decker Inc. Outlook Revised To Negative On Potential Effects From The Coronavirus And Elevated Leverage

We believe the U.S. and Europe will enter a recession in 2020 and anticipate that consumer discretionary spending will decline sharply, much of which will coincide with Stanley Black&Decker Inc.'s important summer selling season for its core tools and storage segment. The company is acquiring Boeing 737 MAX supplier Consolidated Aerospace Manufacturing LLC (CAM) for $1.2 billion. Stanley has made more than $5 billion of acquisitions since 2017, which has increased its adjusted debt to EBITDA slightly above our 2x downgrade threshold for the last two years. We are revising our outlook on the company to negative from stable. The negative outlook indicates that Stanley's debt-funded transactions and subsequent profit disruptions could keep its adjusted debt to EBITDA

...- We believe the U.S. and Europe will enter a recession in 2020 and anticipate that consumer discretionary spending will decline sharply, much of which will coincide with Stanley Black & Decker Inc.'s important summer selling season for its core tools and storage segment. - The company is acquiring Boeing 737 MAX supplier Consolidated Aerospace Manufacturing LLC (CAM) for $1.2 billion. - Stanley has made more than $5 billion of acquisitions since 2017, which has increased its adjusted debt to EBITDA slightly above our 2x downgrade threshold for the last two years. - We are revising our outlook on the company to negative from stable. - The negative outlook indicates that Stanley's debt-funded transactions and subsequent profit disruptions could keep its adjusted debt to EBITDA above 2x for a third consecutive year absent corporate actions to reduce its leverage....

Research Update