$36.34
$109.53
bear $36.34
base $79.82
bull $109.53
margin of safety $40.00
market price* $92.48
Stanley Black & Decker makes hand tools, power tools, outdoor equipment and engineered fasteners. Tools & Outdoor (DEWALT, CRAFTSMAN, STANLEY, BLACK+DECKER, Cub Cadet, Hustler) produces the large majority of sales. The rest comes from Engineered Fastening, which sells fastening systems to automotive, industrial and aerospace customers. Two retailers carry a lot of weight: The Home Depot took about 15% of 2025 sales and Lowe's about 12%, down from 14% in 2024. The company has changed shape a great deal. It sold Security and Oil & Gas in 2022, Infrastructure in April 2024, and in 2026 the CAM aerospace fastener business to Howmet for $1.8 billion. It bought MTD and Excel at the end of 2021. Cash earnings. We start from operating cash flow. We take out the swings in current working capital (receivables, inventory, payables, accrued expenses), stock pay, and the capital spending needed to keep the business as it is. Long-term operating items and pension contributions stay in as real costs. For each year we checked the figure against net income plus non-cash charges, and it ties within a few percent. In 2022 it ties once the $1.2 billion pre-tax gain on the Security sale and an $80 million inventory step-up are set aside. This method also removes a distortion from the company's receivable-sale program, which pushes some customer collections out of operating cash flow. Owner earnings per share were about $7.41 (2016), $6.80, $5.89, $6.08, $8.73 (2020), $7.95, -$1.07 (2022), -$0.60 (2023), $3.63 (2024) and $3.91 (2025). The 2020-21 jump was the pandemic home-improvement boom. The 2022-23 collapse was retailer destocking, a $2 billion inventory build that had to be unwound, cost inflation, and tax on the Security gain. Amortization of acquired intangibles (about $147 million in 2025) is added back as a non-cash charge. Most of it relates to customer relationships with the same big retailers, which the company keeps up through ordinary selling costs. The brands themselves have been around for a century or more. So we do not treat the add-back as a wasting asset, but we also give no growth beyond inflation-level pricing. We value the business before its lenders. Net interest paid (about $322 million in 2025, after about $198 million of interest income, mostly from currency-hedging swaps) is added back. On that basis cash flow per share was $7.36 in 2019, $9.81 in 2020, $8.97 in 2021, $0.63 in 2022, $1.70 in 2023, $5.62 in 2024 and $6.03 in 2025. We use the 2019-2025 stretch because it covers a full cycle under today's portfolio of tools brands: one boom and one bust. Its median is $6.03. We take off about $0.30 a share for the CAM business that was sold (2025 sales $414 million, segment profit $31 million), which gives a starting level of $5.70 a share, about $863 million a year. Growth. Owner earnings grew 8.0% in 2025 (7.3% per share before interest). The base case assumes 5% in year 1. That is below the trailing rate, and the first half of 2026 supports it: operating cash flow before working capital rose by about $180 million against the first half of 2025, with both quarters better. After year 1 the base case adds only 1% a year. Over the past three years the company has raised prices about 3% a year, but volume has fallen (Tools & Outdoor volume was down 5% in 2025), so we credit no volume growth or market share gains. We also give no credit to management's gross-margin targets: margin was 30.3% in 2025, against about 35% before 2021. The company's growth has historically come from large acquisitions, which are bets, not a repeatable small-step process, so we give it no credit. Bear case: about $36 a share. This case repeats a downturn like 2022-2023, when pre-interest cash flow fell from about $9 a share to $0.63 and $1.70. Part of that depth came from one-off items, so we model two trough years at $1.45 and $2.60, after a first year at $5.40. Cash flow then recovers only to $4.60 (margins never get back), and after that it shrinks 1% a year indefinitely as volume keeps slipping and Lowe's sales share keeps falling. In the trough year, cash flow (about $220 million) only just covers net interest. The company would get through on its $3.8 billion of credit lines and a dividend cut. The case also assumes the $1.1 billion of 2028 notes are refinanced at a higher cost. The business is worth about $9.7 billion, it owes about $4.2 billion, and that leaves about $5.5 billion, or $36 a share. Base case: about $80 a share. Cash flow is $5.99 in year 1 and rises 1% a year to $6.55 in year 10. After that it holds flat, supported by the brand franchise and the battery-platform installed base, with no growth assumed. The business is worth about $16.2 billion, it owes about $4.1 billion, and that leaves about $12.1 billion, or $80 a share. Bull case: about $110 a share. The supply-chain cost program and pricing take cash flow back to $7.50 a share by year 4. That level was shown in 2016-2019, though with a slightly different portfolio. It then grows 2.5% a year to $8.70 in year 10 and holds flat. The business is worth about $20.7 billion, it owes about $4.1 billion, and that leaves about $16.6 billion, or $110 a share. Debt. At July 4, 2026, borrowings were $4.76 billion. Commercial paper had been repaid from the CAM proceeds. Of the $592 million in cash, we treat about $300 million as operating cash. We add about $150 million for tax on the CAM sale that we estimate is still to be paid: the company expected net proceeds of $1.525-1.6 billion. Several long bonds carry low fixed coupons: $750 million at 2.30% due 2030, $500 million at 3.00% due 2032 and $750 million at 2.75% due 2050. These are worth about $530 million less than face value to the company, partly offset by the $750 million of 6.71% junior subordinated notes. Net debt comes to about $4.1 billion, roughly $27 a share. The main maturities are $1.1 billion in 2028 and $750 million in 2030. Our previous figures were built on a different basis and are not comparable. Margin-of-safety price: $40. The earnings level is only moderately certain. Cash flow per share is still about a third below the 2016-2021 range, and recent volume trends are negative. The worst plausible outcome is another retailer destocking combined with higher tariff costs, or losing shelf space at one of the two big retailers. The balance sheet would come through this: debt maturities are spread out and the company has $3.8 billion of credit lines. But the shares would lose most of their value above the bear case. If our $5.70 starting level is really $4.75, the base case drops to about the low $60s. If volume keeps falling at 2025's pace, value moves toward the bear case. The dividend is about $3.30 a share a year. From $40, a 20% annual return requires the shares to be worth about $70 within four years, plus dividends. That is below our base case, and the bear case value sits only modestly below that price. That is why the margin-of-safety price is $40.