Intrinsic value of Stanley Black&Decker - SWK

Previous Close

$140.66

  Intrinsic Value

$195.00

stock screener

  Rating & Target

buy

+39%

  Value-price divergence*

+56%

Previous close

$140.66

 
Intrinsic value

$195.00

 
Up/down potential

+39%

 
Rating

buy

 
Value-price divergence*

+56%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SWK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 21.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.10
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  11,407
  11,977
  12,576
  13,205
  13,865
  14,559
  15,286
  16,051
  16,853
  17,696
  18,581
  19,510
  20,485
  21,510
  22,585
  23,714
  24,900
  26,145
  27,452
  28,825
  30,266
  31,779
  33,368
  35,037
  36,789
  38,628
  40,560
  42,588
  44,717
  46,953
  49,300
Variable operating expenses, $m
 
  7,812
  8,169
  8,544
  8,937
  9,351
  9,785
  10,241
  10,719
  11,222
  11,749
  11,634
  12,216
  12,827
  13,468
  14,141
  14,848
  15,591
  16,370
  17,189
  18,048
  18,951
  19,898
  20,893
  21,938
  23,035
  24,186
  25,396
  26,665
  27,999
  29,399
Fixed operating expenses, $m
 
  2,663
  2,730
  2,798
  2,868
  2,939
  3,013
  3,088
  3,165
  3,245
  3,326
  3,409
  3,494
  3,581
  3,671
  3,763
  3,857
  3,953
  4,052
  4,153
  4,257
  4,364
  4,473
  4,584
  4,699
  4,817
  4,937
  5,060
  5,187
  5,317
  5,449
Total operating expenses, $m
  10,010
  10,475
  10,899
  11,342
  11,805
  12,290
  12,798
  13,329
  13,884
  14,467
  15,075
  15,043
  15,710
  16,408
  17,139
  17,904
  18,705
  19,544
  20,422
  21,342
  22,305
  23,315
  24,371
  25,477
  26,637
  27,852
  29,123
  30,456
  31,852
  33,316
  34,848
Operating income, $m
  1,397
  1,503
  1,678
  1,863
  2,060
  2,268
  2,489
  2,722
  2,969
  3,230
  3,506
  4,467
  4,776
  5,102
  5,446
  5,810
  6,195
  6,601
  7,030
  7,483
  7,961
  8,465
  8,998
  9,559
  10,152
  10,777
  11,436
  12,131
  12,865
  13,637
  14,452
EBITDA, $m
  1,805
  2,306
  2,488
  2,681
  2,885
  3,101
  3,330
  3,571
  3,827
  4,098
  4,384
  4,686
  5,005
  5,343
  5,700
  6,076
  6,474
  6,894
  7,338
  7,806
  8,300
  8,822
  9,372
  9,952
  10,565
  11,210
  11,891
  12,609
  13,366
  14,164
  15,005
Interest expense (income), $m
  177
  175
  196
  219
  242
  267
  293
  320
  348
  378
  410
  443
  477
  514
  552
  592
  634
  679
  725
  774
  825
  879
  935
  994
  1,057
  1,122
  1,191
  1,263
  1,338
  1,418
  1,501
Earnings before tax, $m
  1,226
  1,327
  1,481
  1,645
  1,818
  2,001
  2,196
  2,402
  2,620
  2,851
  3,096
  4,024
  4,298
  4,588
  4,894
  5,218
  5,561
  5,923
  6,305
  6,709
  7,136
  7,587
  8,062
  8,565
  9,095
  9,655
  10,246
  10,869
  11,526
  12,220
  12,951
Tax expense, $m
  261
  358
  400
  444
  491
  540
  593
  649
  707
  770
  836
  1,087
  1,160
  1,239
  1,321
  1,409
  1,501
  1,599
  1,702
  1,811
  1,927
  2,048
  2,177
  2,313
  2,456
  2,607
  2,766
  2,935
  3,112
  3,299
  3,497
Net income, $m
  965
  969
  1,081
  1,201
  1,327
  1,461
  1,603
  1,753
  1,913
  2,081
  2,260
  2,938
  3,138
  3,349
  3,573
  3,809
  4,059
  4,324
  4,603
  4,898
  5,209
  5,538
  5,886
  6,252
  6,640
  7,048
  7,479
  7,934
  8,414
  8,920
  9,454

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,160
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,635
  15,200
  15,960
  16,758
  17,596
  18,475
  19,399
  20,369
  21,387
  22,457
  23,580
  24,759
  25,997
  27,296
  28,661
  30,094
  31,599
  33,179
  34,838
  36,580
  38,409
  40,329
  42,346
  44,463
  46,686
  49,020
  51,472
  54,045
  56,747
  59,585
  62,564
Adjusted assets (=assets-cash), $m
  14,475
  15,200
  15,960
  16,758
  17,596
  18,475
  19,399
  20,369
  21,387
  22,457
  23,580
  24,759
  25,997
  27,296
  28,661
  30,094
  31,599
  33,179
  34,838
  36,580
  38,409
  40,329
  42,346
  44,463
  46,686
  49,020
  51,472
  54,045
  56,747
  59,585
  62,564
Revenue / Adjusted assets
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
  0.788
Average production assets, $m
  3,147
  3,306
  3,471
  3,645
  3,827
  4,018
  4,219
  4,430
  4,652
  4,884
  5,128
  5,385
  5,654
  5,937
  6,233
  6,545
  6,872
  7,216
  7,577
  7,956
  8,353
  8,771
  9,210
  9,670
  10,154
  10,661
  11,194
  11,754
  12,342
  12,959
  13,607
Working capital, $m
  1,981
  874
  918
  964
  1,012
  1,063
  1,116
  1,172
  1,230
  1,292
  1,356
  1,424
  1,495
  1,570
  1,649
  1,731
  1,818
  1,909
  2,004
  2,104
  2,209
  2,320
  2,436
  2,558
  2,686
  2,820
  2,961
  3,109
  3,264
  3,428
  3,599
Total debt, $m
  3,827
  4,272
  4,757
  5,267
  5,803
  6,365
  6,955
  7,575
  8,226
  8,909
  9,626
  10,380
  11,171
  12,001
  12,874
  13,789
  14,751
  15,760
  16,820
  17,934
  19,102
  20,329
  21,618
  22,971
  24,391
  25,883
  27,449
  29,094
  30,821
  32,634
  34,537
Total liabilities, $m
  9,268
  9,713
  10,198
  10,708
  11,244
  11,806
  12,396
  13,016
  13,667
  14,350
  15,067
  15,821
  16,612
  17,442
  18,315
  19,230
  20,192
  21,201
  22,261
  23,375
  24,543
  25,770
  27,059
  28,412
  29,832
  31,324
  32,890
  34,535
  36,262
  38,075
  39,978
Total equity, $m
  6,367
  5,487
  5,761
  6,050
  6,352
  6,670
  7,003
  7,353
  7,721
  8,107
  8,512
  8,938
  9,385
  9,854
  10,347
  10,864
  11,407
  11,978
  12,577
  13,205
  13,866
  14,559
  15,287
  16,051
  16,854
  17,696
  18,581
  19,510
  20,486
  21,510
  22,586
Total liabilities and equity, $m
  15,635
  15,200
  15,959
  16,758
  17,596
  18,476
  19,399
  20,369
  21,388
  22,457
  23,579
  24,759
  25,997
  27,296
  28,662
  30,094
  31,599
  33,179
  34,838
  36,580
  38,409
  40,329
  42,346
  44,463
  46,686
  49,020
  51,471
  54,045
  56,748
  59,585
  62,564
Debt-to-equity ratio
  0.601
  0.780
  0.830
  0.870
  0.910
  0.950
  0.990
  1.030
  1.070
  1.100
  1.130
  1.160
  1.190
  1.220
  1.240
  1.270
  1.290
  1.320
  1.340
  1.360
  1.380
  1.400
  1.410
  1.430
  1.450
  1.460
  1.480
  1.490
  1.500
  1.520
  1.530
Adjusted equity ratio
  0.360
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  965
  969
  1,081
  1,201
  1,327
  1,461
  1,603
  1,753
  1,913
  2,081
  2,260
  2,938
  3,138
  3,349
  3,573
  3,809
  4,059
  4,324
  4,603
  4,898
  5,209
  5,538
  5,886
  6,252
  6,640
  7,048
  7,479
  7,934
  8,414
  8,920
  9,454
Depreciation, amort., depletion, $m
  408
  804
  810
  818
  825
  833
  841
  849
  858
  868
  878
  219
  230
  241
  253
  266
  279
  293
  308
  323
  340
  357
  374
  393
  413
  433
  455
  478
  502
  527
  553
Funds from operations, $m
  1,479
  1,773
  1,892
  2,018
  2,152
  2,294
  2,444
  2,603
  2,771
  2,949
  3,138
  3,157
  3,367
  3,590
  3,826
  4,075
  4,339
  4,617
  4,911
  5,221
  5,549
  5,895
  6,260
  6,645
  7,052
  7,482
  7,934
  8,412
  8,916
  9,447
  10,007
Change in working capital, $m
  -6
  42
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  71
  75
  79
  82
  87
  91
  95
  100
  105
  110
  116
  122
  128
  134
  141
  148
  155
  163
  171
Cash from operations, $m
  1,485
  1,731
  1,848
  1,972
  2,104
  2,243
  2,391
  2,547
  2,713
  2,888
  3,073
  3,089
  3,296
  3,516
  3,748
  3,993
  4,252
  4,526
  4,815
  5,121
  5,444
  5,784
  6,144
  6,524
  6,924
  7,347
  7,793
  8,264
  8,760
  9,284
  9,836
Maintenance CAPEX, $m
  0
  -128
  -134
  -141
  -148
  -156
  -163
  -172
  -180
  -189
  -199
  -208
  -219
  -230
  -241
  -253
  -266
  -279
  -293
  -308
  -323
  -340
  -357
  -374
  -393
  -413
  -433
  -455
  -478
  -502
  -527
New CAPEX, $m
  -347
  -159
  -165
  -174
  -182
  -191
  -201
  -211
  -222
  -233
  -244
  -256
  -269
  -283
  -297
  -312
  -327
  -344
  -361
  -379
  -398
  -418
  -439
  -460
  -484
  -508
  -533
  -560
  -588
  -617
  -648
Cash from investing activities, $m
  -284
  -287
  -299
  -315
  -330
  -347
  -364
  -383
  -402
  -422
  -443
  -464
  -488
  -513
  -538
  -565
  -593
  -623
  -654
  -687
  -721
  -758
  -796
  -834
  -877
  -921
  -966
  -1,015
  -1,066
  -1,119
  -1,175
Free cash flow, $m
  1,201
  1,444
  1,549
  1,658
  1,773
  1,896
  2,026
  2,165
  2,311
  2,466
  2,631
  2,624
  2,808
  3,003
  3,210
  3,428
  3,659
  3,903
  4,161
  4,434
  4,722
  5,027
  5,349
  5,689
  6,048
  6,427
  6,827
  7,249
  7,695
  8,165
  8,661
Issuance/(repayment) of debt, $m
  2
  457
  486
  510
  535
  562
  590
  620
  651
  683
  717
  753
  791
  831
  872
  916
  962
  1,010
  1,060
  1,113
  1,169
  1,227
  1,289
  1,353
  1,421
  1,492
  1,566
  1,645
  1,727
  1,813
  1,904
Issuance/(repurchase) of shares, $m
  -103
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -102
  457
  486
  510
  535
  562
  590
  620
  651
  683
  717
  753
  791
  831
  872
  916
  962
  1,010
  1,060
  1,113
  1,169
  1,227
  1,289
  1,353
  1,421
  1,492
  1,566
  1,645
  1,727
  1,813
  1,904
Total cash flow (excl. dividends), $m
  997
  1,900
  2,034
  2,168
  2,309
  2,458
  2,617
  2,784
  2,962
  3,150
  3,348
  3,377
  3,599
  3,834
  4,082
  4,344
  4,620
  4,913
  5,221
  5,547
  5,891
  6,254
  6,637
  7,042
  7,468
  7,918
  8,393
  8,894
  9,422
  9,978
  10,565
Retained Cash Flow (-), $m
  -555
  -268
  -274
  -288
  -302
  -318
  -333
  -350
  -368
  -386
  -405
  -426
  -447
  -469
  -493
  -517
  -543
  -570
  -599
  -629
  -660
  -693
  -728
  -764
  -803
  -843
  -885
  -929
  -976
  -1,024
  -1,076
Prev. year cash balance distribution, $m
 
  1,148
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,780
  1,760
  1,879
  2,006
  2,141
  2,283
  2,434
  2,594
  2,763
  2,943
  2,952
  3,152
  3,364
  3,589
  3,826
  4,077
  4,342
  4,622
  4,918
  5,231
  5,561
  5,909
  6,277
  6,666
  7,076
  7,508
  7,965
  8,446
  8,954
  9,490
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  2,661
  1,605
  1,625
  1,637
  1,640
  1,633
  1,616
  1,587
  1,548
  1,499
  1,356
  1,295
  1,225
  1,148
  1,064
  975
  883
  790
  697
  607
  521
  440
  365
  298
  239
  188
  145
  109
  81
  58
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Stanley Black & Decker, Inc. provides tools and storage, commercial electronic security, and engineered fastening systems worldwide. Its Tools & Storage segment provides corded and cordless electric power tools and equipment, including drills, wrenches and drivers, grinders, saws, routers, and sanders; pneumatic tools and fasteners, such as nail guns, nails, staples, and anchors; lawn and garden products comprising trimmers, mowers, edgers, and related accessories; home products, such as vacuums, paint tools, and cleaning appliances; power tool accessories that include drill and router bits, abrasives, and saw blades; measuring, leveling, and layout tools; planes, hammers, demolition tools, knives, saws, chisels, and industrial and automotive tools; and storage products, such as tool boxes, sawhorses, medical cabinets, and engineered storage products. The company’s Security segment offers alarm monitoring, video surveillance, fire alarm monitoring, systems integration, and system maintenance services; markets asset tracking, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products; sells automatic doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, and tubular and mortise door locksets. Its Industrial segment sells fastening products and systems comprising stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, plastic and mechanical fasteners, self-piercing riveting systems, nut running systems, micro fasteners, high-strength structural fasteners, and hydraulic tools and accessories; sells and rents custom pipe handling, joint welding, and coating equipment; and provides pipeline inspection services. The company was formerly known as The Stanley Works and changed its name to Stanley Black & Decker, Inc. in March 2010. The company was founded in 1843 and is headquartered in New Britain, Connecticut.

FINANCIAL RATIOS  of  Stanley Black&Decker (SWK)

Valuation Ratios
P/E Ratio 22.2
Price to Sales 1.9
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 18.9
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.6%
Cap. Spend. - 3 Yr. Gr. Rate 0.4%
Financial Strength
Quick Ratio 97
Current Ratio 0.2
LT Debt to Equity 59.9%
Total Debt to Equity 60.1%
Interest Coverage 8
Management Effectiveness
Return On Assets 7.2%
Ret/ On Assets - 3 Yr. Avg. 6.5%
Return On Total Capital 9.7%
Ret/ On T. Cap. - 3 Yr. Avg. 8.6%
Return On Equity 15.8%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 37.4%
Gross Margin - 3 Yr. Avg. 36.7%
EBITDA Margin 15.9%
EBITDA Margin - 3 Yr. Avg. 15.5%
Operating Margin 12.2%
Oper. Margin - 3 Yr. Avg. 11.7%
Pre-Tax Margin 10.7%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin 8.5%
Net Profit Margin - 3 Yr. Avg. 7.7%
Effective Tax Rate 21.3%
Eff/ Tax Rate - 3 Yr. Avg. 21.3%
Payout Ratio 34.3%

SWK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SWK stock intrinsic value calculation we used $11407 million for the last fiscal year's total revenue generated by Stanley Black&Decker. The default revenue input number comes from 2016 income statement of Stanley Black&Decker. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SWK stock valuation model: a) initial revenue growth rate of 5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for SWK is calculated based on our internal credit rating of Stanley Black&Decker, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Stanley Black&Decker.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SWK stock the variable cost ratio is equal to 65.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2598 million in the base year in the intrinsic value calculation for SWK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.6% for Stanley Black&Decker.

Corporate tax rate of 27% is the nominal tax rate for Stanley Black&Decker. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SWK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SWK are equal to 27.6%.

Life of production assets of 24.6 years is the average useful life of capital assets used in Stanley Black&Decker operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SWK is equal to 7.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6367 million for Stanley Black&Decker - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 152.049 million for Stanley Black&Decker is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Stanley Black&Decker at the current share price and the inputted number of shares is $21.4 billion.

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COMPANY NEWS

▶ 3 Heirloom Stocks to Hold Forever   [Aug-17-17 10:32AM  Motley Fool]
▶ Stanley Black & Decker May Be Hammering Out a 'Bear Flag'   [Aug-01-17 03:20PM  TheStreet.com]
▶ Stanley Black & Decker Names Janet Link General Counsel   [Jul-25-17 09:12AM  PR Newswire]
▶ Stanley Black & Decker tops Street 2Q forecasts   [Jul-24-17 09:19PM  Associated Press]
▶ Cramer: Roof Is Collapsing on Home Depot   [07:01PM  TheStreet.com]
▶ Big movers in the Blitz   [01:20PM  CNBC Videos]
▶ Story Stocks from Briefing.com   [12:24PM  Briefing.com]
▶ Top Companies Owned by Sears (SHLD)   [Jul-20-17 11:01AM  Investopedia]
▶ Stanley Black & Decker board hikes dividend   [Jul-19-17 06:34PM  MarketWatch]
▶ The Best Stock in Connecticut: Stanley Black & Decker   [Jul-17-17 12:50PM  Kiplinger]
▶ What you need to know about Modi's India?   [Jun-28-17 05:21PM  Zacks]
▶ These 3 Stocks Are Up Big in 2017: Is There Room to Run?   [Jun-21-17 07:41AM  Motley Fool]
▶ Stanley Black & Decker: Analysts Latest Recommendations   [Jun-08-17 07:36AM  Market Realist]
▶ Should Stanley Black & Decker Raise Its Dividend?   [Jun-07-17 12:35PM  Market Realist]
▶ Sears to Close 72 More Stores?   [08:55AM  24/7 Wall St.]
▶ The 1 Stock You've Been Overlooking for Your Roth IRA   [Jun-02-17 12:12PM  Motley Fool]
▶ Toolmaker eyes huge manufacturing center in northern York County   [May-24-17 09:33AM  American City Business Journals]
▶ Flir finds new CEO at Stanley Black & Decker   [May-23-17 02:40PM  American City Business Journals]
▶ Buying opportunity in a toolmaker   [May-17-17 07:04PM  CNBC Videos]
▶ 3 Top Industrial Machinery Stocks to Buy in 2017   [May-13-17 11:40AM  Motley Fool]
▶ Why All Signs Point to a Hot Housing Market   [Apr-26-17 06:30AM  Motley Fool]
▶ Stanley Black & Decker Has the Bullish Tools   [12:53PM  TheStreet.com]
▶ Company News for April 24, 2017   [10:28AM  Zacks]
▶ Cramer: How to Play the French Elections   [Apr-23-17 04:06PM  TheStreet.com]
Stock chart of SWK Financial statements of SWK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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