I'm tired of reading about how weakness in the housing market is clobbering stocks. After all, a company's true test isn't how well it performs when times are easy. Black & Decker (NYSE:BDK) released first-quarter earnings yesterday, and like Home Depot (NYSE:HD) and Lowe's (NYSE:LOW), it's feeling the pain now, but showing solid prospects for the future.

Black & Decker's first-quarter sales were up 3%, but revenue offered nothing to get excited about. Foreign currency translation accounted for two of those percentage points, and its acquisition of Vector Products last year added the final point. The company's profits aren't much to write home about, either. Net earnings of $108 million dropped slightly from last year's $113 million, although share buybacks drove EPS 11% higher. Both sales and EPS were slightly better than what the Street expected.

Why is this good?
These are encouraging results after Black & Decker's fourth-quarter setback, in which sales fell 7% and EPS slid more than 30% (excluding an unusual tax event). Margin and expense ratios are also falling back in line. During the fourth quarter, margins slid 250 basis points, with expenses up 70 basis points. But for the first quarter, margins as a percentage of sales held flat year over year, while the expenses rose only 20 basis points. The company seems to be responding intelligently to a slowdown in revenue.

More good news?
There are other promising signs in the balance sheet and cash flow statement. The working capital the company employed (excluding cash and short-term borrowings) stayed essentially flat from last year. The company also generated $137 million in free cash flow during the first quarter, up from $22 million last year. When business is in a funk, grinding out positive cash flow is an unglamorous but important accomplishment.

Spinning up an outlook
On the earnings call, management expressed caution about the rest of the year, in both sales and raw material costs. The company committed to convert 90% of second-quarter EPS into free cash flow. 

If you're interested in finding out more about this great brand, check out our Motley Fool CAPS community take on Black & Decker. By a ratio of more than 10 to 1, the 35 CAPS All-Stars who've rated this stock believe it will outperform the market. Hey, making money can't always be action-packed.

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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, but doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.