Stanley Nails It Again

As somebody who spends nearly every weekend smacking his thumb with a hammer and giving himself carpal tunnel syndrome from rampant overuse of screwdrivers, I'm pretty familiar with the products made by our friends at Stanley Works (NYSE: SWK  ) .

This morning, the tool maker and security solutions provider announced record first-quarter sales and profits. We already knew things would be good, but whenever that kind of braggadocio appears on a news release's headline, it makes the bells on our Fool caps jingle with suspicion, if not alarm. What are they trying to hide?

In Stanley's case, it looks like... nothing. Net sales from continuing operations hit $779 million. Ah ha! But it's had some acquisitions, no? To the firm's credit, it fully discloses that, even without those new revenues, sales were still up 16% over the prior-year period.

Earnings per share (EPS) reported at the top of the release were $0.70 per stub, beating even the upped guidance from last month. Ah ha! What kind of onetime charges were there to juice these results? Well, there was a credit for discontinued operations that totaled $1.14 per share. But the firm didn't factor that in until further down the release. Including that gain, EPS was actually $1.84, much higher than trumpeted in the headline.

Rats. Stanley really knows how to take the fun out of the press-release gotcha game. Gross margins? Check: up 1.6%. Selling, general, and administrative expenses? Check: down 2.7% as a percentage of revenues. Sales were up in the high teens to 20% in all three operating segments, even without the increases from recent acquisitions. Clearly, Stanley is capitalizing on the same tool frenzy that's also lifting competitor Black & Decker (NYSE: BDK  ) .

The only potential place to take a poke at Stanley might be the valuation. After all, it's already been a double since last year. But even here, things look good. At $44 per share, the forward P/E on management's results expected from operations stands around 15. And the ratio of enterprise value-to-free cash flow based on management's guidance is just over 14. Stanley has a history of providing copious excess green, and it pays a healthy dividend, so the stock is worth a look despite the recent run-up.

Mathew Emmert had his eye on Stanley Works before the recent run. See what else he digs up in his Motley Fool Income Investor .

Anti-vibe hammer? Fool contributor Seth Jayson wonders when Stanley will come up with an anti-thumb hammer. He hopes Stanley will make an anti-thumb hammer soon, and he owns no stake in any company mentioned above. View his Fool profile here.