JP Morgan Gives Key Takeaways On Stanley Black & Decker Following Earnings Conference Call

In addition to Stanley Black & Decker SWK noting in its release that it raised its 2011 Operating EPS guidance by $0.25 to $5.00-5.25, driven by a lower tax rate of 20-21%, as well as the announcement of its share buyback program, the company also provided key incremental data points regarding its full year guidance. Specifically, Stanley Black & Decker noted that due to the timing of inflation and expected price recovery, as well as additional tax settlements expected in 2H11, 1H11 will represent roughly 45% of full year EPS, which JP Morgan's estimate implies 2Q11 EPS of roughly $1.20. Moreover, SWK noted that while it continues to expect price to offset 33-50% of commodity inflation in 2011, it expects price recovery for 2H11 to be approximately 80%, with net negative material headwinds of approximately $40 mil. in 2Q and $20 mil. in 2H11. Stanley Black & Decker noted that its outlook for 80% price recovery in 2H11 was driven by a more significant “second wave” of price inflation seen this past February and March, which enabled it to have more substantive discussions with its customers regarding more considerable price recovery actions. JP Morgan has a $78 PT and Neutral rating on SWK SWK closed Wednesday at $75.32