Stanley Black & Decker, Inc. (SWK), Kennametal Inc. (KMT): This Company Is a Solid Bet

Going forward, analysts expect that Kennametal will increase its gross margin from 32.6% in fiscal ’13 to 34.6% in fiscal ’14. In addition, the EBITDA margin, which currently is 15.2% in ’13, is expected to grow to 17.2% in ’14. Kennametal is a cash-rich company where, at the end of the last quarter, the cash balance jumped nearly 400% year-over-year to $377 million.

It is, however, currently facing a tough environment and had acquired Stellite last year to strengthen its footprint in energy and power generation. It also acquired Emura recently, and this should again make Kennametal’s tungsten deriving sources stronger. But investors should consider the weakness that the company is facing due to soft demand in infrastructure and industrial end-markets.

Snap-on has one segment where it manufactures air power tools, air power tool accessories and electric power tools, which compete with equivalent product offerings from Stanley Black & Decker, Inc. (NYSE:SWK). Snap-on Incorporated (NYSE:SNA) reported second-quarter EPS of $1.50, which beat consensus estimates of $1.43 by 9%. This was higher by 15.4% from the prior-year quarter’s earnings of $1.30.

The company reported revenue growth in three of its four segments, with the tools segment witnessing both 6.5% year-over-year growth to $346.2 million and a jump of 7% in organic sales.

The company also maintained that it would stay focused on emerging markets besides continuing its efforts to increase margins by focusing on what it calls the “Snap-on value creation” process. In addition, it also wants to keep expanding in mobile tools and vehicle-repair garage markets, which are bound to grow as more and more vehicles hit the road.


Stanley Black & Decker is a company that is committed to growth and is financially disciplined. It’s going to be one of those stocks that does not need to be looked at daily, and should offer good returns in the long term.

The article This Company Is a Solid Bet originally appeared on and is written by ANUP SINGH.

ANUP SINGH has no position in any stocks mentioned. The Motley Fool recommends Kennametal. ANUP is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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