Stanley Black & Decker, Inc. (SWK), Danaher Corporation (DHR): A Cheap Tool Manufacturer With Ambitious Growth

Stanley Black & Decker, Inc. (NYSE:SWK) was formed by the merger of Stanley Works and Black & Decker in 2010. Since the merger, all signs point to healthy growth and a good long-term strategy to create value for its shareholders, however shares have lagged the overall market since that time. Although at the current share price the company is very close to its 52-week high, shares are worth just 20% more than they were at the end of 2010. With very strong earnings growth projected, is Stanley Black & Decker, Inc. (NYSE:SWK) one of the few remaining bargains in the market, or would we be better off investing in one of its competitors?

About the company

Stanley Black & Decker, Inc. (NYSE:SWK) is one of the leading manufacturers of hand and power tools, and has many well-known brands in its portfolio. Their business is broken into three segments, Construction & Do-it Yourself, Industrial Tools, and Security Solutions. Truly an international company, less than half of Stanley Black & Decker, Inc. (NYSE:SWK)’s sales come from within the U.S.

The Construction & Do-it-Yourself segment accounts for just over half of the company’s total sales and includes tools, lawn and garden products, plumbing accessories, storage systems, and more. These products are distributed to retailers and other customers under brand names such as Stanley Black & Decker, Inc. (NYSE:SWK), DeWalt, and DustBuster.

The Industrial Tools segment primarily makes tools and equipment for use by a variety of industrial customers and is mostly sold directly to the customers. Finally, the Security Solutions segment makes and installs security systems, surveillance equipment, emergency call products, and more on primarily a direct-sales basis.

Growth: past, present, and future

Aside from the major acquisition/merger of Black & Decker, the company has been very active in strategic acquisitions, particularly those that will increase their presence in emerging markets. In 2011, they acquired Niscayah Group, a Swedish security and monitoring company, for $1.2 billion. More recently, in February of this year, the company acquired Infastech, a Hong Kong-based manufacturer and distributor of specialty fastening products, for $850 million. Stanley Black & Decker estimates that this acquisition alone will increase their revenues from emerging markets by 16%. These acquisitions are projected to produce higher operating margins during the current fiscal year and beyond, as a result of increasing efficiency as the new companies become fully integrated into the existing operations.