Shares of Stanley Black & Decker (SWK 3.35%) jumped 6.8% on Monday morning after the owner of iconic tools and outdoor equipment brands announced a big asset sale in a move to fortify its balance sheet.
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A significant step to cut debt
Stanley Black & Decker is in the midst of a multi-year restructuring, targeting $2 billion in pre-tax cost savings by the end of 2025 through divestitures of non-core assets, simplification of its supply chain, and a focus on core businesses.
In line with its mission, the company struck a major deal on Dec. 22 to sell its consolidated aerospace manufacturing business to Howmet Aerospace (HWM 3.10%) for $1.8 billion in cash. The unit, which is expected to generate $405 million to $415 million in fiscal year 2025, manufactures critical components for the aerospace and defense industries, including fasteners, fittings, and other engineered components.
It's a perfect fit for Howmet Aerospace, a key player in the aerospace and defense industry, with a specialization in engine components and fastening systems.
NYSE: SWK
Key Data Points
For Stanley Black & Decker, this is a move to divest a non-core business and use the proceeds to pare debt, achieving a target leverage ratio of net debt-to-adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of 2.50. Stanley Black & Decker expects to close the sale to Howmet in the first half of 2026.
It's time to put Stanley Black & Decker stock on your radar
Stanley Black & Decker stock is better known for its dividends. The stock is a Dividend King, belonging to a niche group of companies that have raised their dividend payout for at least 50 consecutive years. Stanley Black & Decker boasts an unbeatable 58-year track record and is committed to dividend growth.
Its aerospace unit sale to Howmet Aerospace should help the company deleverage and use its future incremental cash flows to raise dividends and repurchase shares. That should also alleviate investors' concerns about a potential dividend cut due to high debt and weak cash flows.
Today's development, in fact, should encourage investors to put Stanley Black & Decker stock on their radar, as it is an essential step in the company's journey to becoming leaner and stronger. The stock is down about 6% in 2025 so far, as of this writing.
