Stanley Black & Decker's shares fell in trading Thursday after the company reported that its first-quarter profit fell short of expectations.
THE SPARK: The maker of tools, locks, fasteners and other hardware products reported late Wednesday that its first-quarter net income shrank due to restructuring and acquisition costs. Its revenue increased 12 percent to beat market expectations.
The company stood by its full-year forecast of $5.75 to $6 per share on an adjusted basis. Analysts had forecast earnings of $5.85 per share for the year, according to FactSet.
THE BIG PICTURE: Stanley Works agreed to buy Black & Decker in a deal that closed in 2010. The company also announced last year that was acquiring Swedish commercial security and monitoring company Niscayah Group AB and it is still coping with the costs for both deals.
THE ANALYSIS: Baird analyst Peter Lisnic said that the decline in stock price presents an opportunity to buy shares.
The company still delivered strong sales volume and solid margins in its industrial and "do it yourself" construction divisions, which were offset but slightly weaker performance in its security business, Lisnic said. The company's was also facing high expectations for the quarter given recent improvements in the housing market, he said. Lisnic pointed specifically to the company's earnings potential and cash flow.
SHARE ACTION: The company's shares have been climbing since this fall when they were trading at near bottom of $47.83. But this week's report sent its shares down $3.81, nearly 5 percent, to $74.68 in afternoon trading.