It's hard not to applaud Black & Decker
While the stock may be taking a breather, the business marches merrily on. Sales were up about 23% this quarter as the company coupled mid-single-digit organic growth with a strong contribution from acquisitions like Porter-Cable and Delta Tools. Operating profitability improved a bit, and the company managed to achieve more than 29% operating income growth.
However, cash flow is lagging. Year-to-date free cash flow is in line with last year's level, which management guidance suggests will continue for the full year. I find it unfortunate that the company doesn't include a cash flow statement with earnings; they're otherwise diligent in communicating their performance. Nevertheless, it looks like working capital management is the culprit this year -- perhaps due to the inventories and trade receivables taken on in the acquisitions.
Black & Decker is a very strong player, which is actually proving to be a bit of a mixed blessing. While having a controlling share of the North American tool market means they can't be ignored by the likes of Lowe's
Conspiracy theories aside, I'm basically lukewarm on this one. I think it's a fine company, and the price isn't too unattractive. The biggest issue I have with Black & Decker is simply that there are literally thousands of other stocks to choose from, and I just happen to like some other ideas better.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).