Stanley Black & Decker, Inc. (SWK) · Nov 4, 2026 · Earnings
Beat — Adjusted EPS $2.31 vs ~$1.54 consensus
Stanley Black & Decker earnings beat sharply on a major margin recovery, even as reported sales edged lower and Engineered Fastening weakened.
Stanley Black & Decker is midway through a portfolio and supply-chain transformation: it is concentrating on Tools & Outdoor, simplifying operations, closing facilities and using divestiture proceeds to reduce debt and fund capital returns. Management had already raised 2026 adjusted EPS guidance to $5.20–$5.80 and free-cash-flow guidance to $600–$800 million after Q2.
The quarter was a clear earnings beat, driven by profitability rather than demand. Adjusted diluted EPS came in at $2.31 versus published consensus of roughly $1.54–$1.55, while revenue of $3.732 billion was slightly below the roughly $3.74 billion expectation. The important change is the margin conversion: adjusted gross margin reached 39.4%, up from 31.6% a year earlier, and adjusted EBITDA margin rose to 16.3% from 12.3% (Non-GAAP reconciliation). This is the strongest evidence so far that the transformation is producing operating leverage rather than merely cutting costs around stagnant sales.
| Metric | Q3 2026 | Q3 2025 | Consensus |
|---|---|---|---|
| Revenue (Income Statement) | $3,731.6M | $3,756.0M | ~$3,740M |
| Adjusted diluted EPS (Non-GAAP reconciliation) | $2.31 | $1.43 | ~$1.54 |
| Adjusted gross margin (Non-GAAP reconciliation) | 39.4% | 31.6% | |
| Adjusted EBITDA (EBITDA reconciliation) | $609.1M | $461.0M | |
| Free cash flow before dividends (Cash Flow statement) | $585.0M | $155.3M |
Tools & Outdoor is carrying the recovery, while Engineered Fastening remains the weak spot. Tools & Outdoor sales grew 2.5% reported and 4% organically, but segment profit jumped 48% and its adjusted margin expanded to 17.6% from 12.0% (Segment results). Engineered Fastening sales fell 21% reported, largely reflecting the completed CAM divestiture, while its adjusted margin slipped to 11.7% from 12.8%. The filing explicitly notes that CAM contributed $117.0 million of nine-month sales and $22.0 million of segment profit before its sale. 〔0〕
Cash generation materially strengthens the transformation story. Operating cash flow reached $658.5 million and free cash flow before dividends was $585.0 million, versus $221.2 million and $155.3 million respectively a year ago (Cash Flow statement). Cash rose to $749.1 million from $287.4 million at year-end, while short-term borrowings and current debt maturities were eliminated; however, the quarter also included $250.9 million of share repurchases and $122.9 million of dividends. The balance sheet therefore looks more flexible, not just more profitable.
The beat is not entirely clean, but the offsets are limited. Reported sales were slightly below expectations, Engineered Fastening contracted, and the company recorded a $19.7 million Excel-related impairment plus $29.5 million of restructuring charges (Non-GAAP adjustments). Those items are smaller than last year’s $169.1 million impairment charge, while the filing also shows lower interest expense and sharply better gross profit. The net result is that the quarter advances the existing turnaround story rather than rewriting it.
Bottom line: This was a meaningful earnings beat built on broad margin improvement and much stronger cash generation, not a demand breakout. It materially strengthens confidence that Stanley Black & Decker’s transformation is working, although Engineered Fastening and reported sales remain unfinished parts of the story.
Q4 earnings and full-year 2026 results
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