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
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.
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
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.
For more constructive Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).