Another quarter and another hike in full-year guidance for Stanley Black & Decker (SWK 0.33%). Management started 2021 guiding toward full-year adjusted earnings per share (EPS) of $9.70 to $10.30 and increased it twice through the year, and it now stands at $11.35 to $11.65.

The near-term outlook is improving, and there are plenty of reasons to believe Stanley is set for excellent long-term growth too. Here's the lowdown.

A DIY carpenter marks a two-by-four for cutting.

Image source: Getty Images.

More than just a stay-at-home stock

A quick look at Stanley's earnings in the first half of the year shows that the company makes money. Clearly, that's thanks to its collection of tool brands. They range from consumer DIY-focused brands like Black & Decker and Craftsman to tradesman tools like Stanley and Irwin and professional tools such as DeWALT, Stanley FatMax, and Lenox.

The stay-at-home measures have led to a well-documented surge in interest in DIY and home improvement, and the company has been a key beneficiary of it. However, it would be a mistake to assume that Stanley's growth will collapse when the pandemic is a historical footnote.

Indeed, during the earnings call, CFO Don Allan said that "we've seen a really strong ramp in professional activity starting in the fourth quarter of last year" driven by professional construction demand.

Pie chart showing Stanley Black & Decker segment profit.

Data source: Stanley Black & Decker presentations.

Tools and storage

Stanley's management likes the company to be seen as the consolidator of choice in the tools industry, and Irwin, Lenox, and Craftsman are all brands acquired within the last five years. As a result, management can carry on building value in its brands by developing distribution channels and implementing growth initiatives such as releasing more cordless tools. For reference, Stanley's "existing cordless outdoor power equipment business has grown over 70% in the first half of the year," according to CEO Jim Loree on the earnings call.

In addition, the pandemic has boosted Stanley's e-commerce operations. Loree argued that Stanley has "approximately three times the share in e-commerce as our next closest competitor," and the share of tool sales coming from e-commerce is now 18% compared to just 12% a year ago.

Simply put, Stanley stands well positioned to benefit in the postpandemic e-commerce world.

DIY tools.

Image source: Getty Images.

The MTD Holdings acquisition

Having already bought 20% of outdoor power equipment company MTD Holdings in 2019, Stanley recently announced it had agreed to buy the remaining 80% for $1.6 billion. Not only will the addition of MTD transform Stanley into a major player in a new, complementary category, lawn and garden equipment, but it also looks like an excellent bit of business.

Stanley's management expects MTD will add $0.50 to EPS in 2022 and more than $1 by 2025. Moreover, the total purchase price works out to approximately 8 times adjusted 12-month trailing earnings before interest, taxation, depreciation, and amortization (EBITDA). That's a good value in itself. It looks even better when you consider that Stanley's management believes it can take MTD's EBITDA margin from high single digits "to the mid-teens over the next four years as cost and revenue opportunities are realized."

Is Stanley Black & Decker stock a good value?

The confluence of growth opportunities leads Wall Street analysts to pencil in some highly attractive growth numbers for Stanley. For example, without counting the addition of MTD, the analyst consensus has Stanley's EBITDA rising from $2.7 billion in 2020 to $3.6 billion in 2023. Meanwhile, analysts forecast free cash flow (FCF) to increase from $1.7 billion in 2020 to around $2.2 billion in 2023.

A DIY carpenter consults building plans.

Image source: Getty Images.

For the full year 2021, Stanley trades on an estimated enterprise value-to-EBITDA multiple of less than 11 times EBITDA and a price-to-FCF multiple of around 18 times FCF. Throw in the MTD acquisition and the potential for postpandemic growth, and Stanley looks like a good value.

The market might well be worried about a slowdown in consumer DIY spending and the specter of rising raw-material prices. However, Stanley has plenty of other growth prospects, and the fact that management has raised guidance through 2021 demonstrates margin resiliency in the face of rising costs.

All told, Stanley Black & Decker remains an excellent option for investors.