Sometimes markets panic because they misunderstand what's going on with a business. Other times they panic because folks are pretty much right about impending performance and they don't want to be holding the bag. The latter would seem to explain a lot of Black & Decker's (NYSE:BDK) precipitous fall since May of this year.

By no means was this is a stellar quarter for this leading tool and hardware company. Sales were flat as reported but would have been down slightly if not for the benefit of an acquisition. Gross and operating margins did improve, but that resulted only in operating-income growth of 4%.

The power-tools and hardware/home-improvement businesses each saw pretty similar levels of underperformance. Power-tool segment sales were up just 1%, while hardware sales dropped 6% on a double-digit decline in faucet sales. And though the fastener business did relatively better, it's too small to really matter that much.

Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) aren't doing the likes of Black & Decker and Stanley (NYSE:SWK) any favors. B&D once again commented that retailer inventory reductions played a role in the sales decline. I wonder whether this is a permanent strategy on the part of big-box retailers to simply carry less inventory, or whether it's something they're doing in response to a worsening outlook for their own sales. Time will tell, I guess.

For now, it's batten-down-the-hatches time for stocks like B&D's that are sensitive to housing trends (even if they're not as sensitive as people commonly think) and general economic conditions. And given what I've seen from the likes of Danaher (NYSE:DHR) and Techtronic, I don't think anybody in this space is doing a real bang-up job right now.

I still like this business, and even when I cut down growth expectations, the stock looks cheap enough to be interesting. This is an idea that'll probably take some time to work out, though, so folks looking for a faster return on their money probably should look past Black & Decker.

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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).