Stanley Black & Decker (SWK) has agreed to sell its aerospace business for $1.8 billion as management tries to lower the company’s debt and improve its balance sheet.
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Management at Black & Decker, known mostly for its tools, signaled for months that they planned to sell the company’s aerospace fastening business. Airplane parts maker Howmet Aerospace (HWM) agreed to acquire Stanley Black & Decker’s Consolidated Aerospace Manufacturing (CAM) unit in an all-cash deal.
The unit being sold makes fasteners and engineered components for aerospace and defense manufacturers such as Howmet. Analysts have been quick to praise the deal, saying it will help to accelerate Black & Decker’s multi-year restructuring and reduce the company’s debt.
Focusing on Black & Decker’s Core Business
Stanley Black & Decker’s management team has said that offloading the aerospace business will help them focus more on the company’s core automotive fastener business, where it has a strong market position. The $1.8 billion of cash is also expected to provide Black & Decker with financial flexibility moving forward.
Analysts at Jefferies Financial Group (JEF) are urging Stanley Black & Decker to undertake share buybacks once the sale of the aerospace unit to Howmet is completed. Jefferies reiterated a Buy rating on SWK stock after the sale was announced.
Is SWK Stock a Buy?
Stanley Black & Decker’s stock has a consensus Moderate Buy rating among eight Wall Street analysts. That rating is based on five Buy, two Hold, and one Sell recommendations issued in the last three months. The average SWK price target of $85.75 implies 12.75% upside from current levels.
