Date clarification: SWK’s 2Q26 earnings release and call are scheduled for Wednesday, July 29, 2026, before the market opens, with the call at 8:00 a.m. ET. That is today, not tomorrow.
SWK enters 2Q with a much cleaner balance-sheet and portfolio story following the sale of its Aerospace Fasteners (CAM) business, but the central question remains whether management can convert price, tariff mitigation, productivity actions, and a more rational promotional environment into the gross-margin inflection it promised.
The company set a fairly explicit 2Q framework in April:
| Metric | Company’s 2Q26 outlook | 2Q25 actual |
|---|---|---|
| Net sales | ~$3.9B | $3.9B |
| Reported sales growth | Slightly down YoY | (2)% YoY |
| Organic sales growth | Low-single-digit positive | (3)% |
| Adjusted EPS | $1.15–$1.25 | $1.08 |
| Adjusted gross-margin change | ~+300 bps YoY | 27.5% adjusted GM |
The gross-margin target implies an adjusted gross margin of roughly 30.5%, a material improvement from 2Q25’s tariff- and volume-pressured base. That makes the earnings reaction likely to hinge less on whether reported revenue is down—because of the CAM sale—and more on whether margins, core organic growth, and the full-year outlook support a credible path to a 35%+ gross margin by 4Q26.
Management expects approximately 300 bps of year-over-year adjusted gross-margin expansion in 2Q. This is the first major proof point after 1Q adjusted gross margin was essentially flat year over year at 30.2%.
The planned 2Q improvement is supposed to come from:
Management has characterized the 2026 back-half margin step-up as visible in its cost base, with productivity and fixed-cost restructuring doing most of the work and tariff mitigation providing an additional contribution. Investors should therefore expect more than a modest beat: a result near the 300-bp target and reaffirmation of the 4Q26 35%+ adjusted-GM objective are likely needed to sustain the bullish narrative.
Watch items - Adjusted gross margin versus the roughly 30.5% implied target; - Tools & Outdoor segment margin; - The mix of price, volume, productivity, tariffs, and promotional activity; - Any change in the timing or attainability of the 35%+ 4Q target.
Tools & Outdoor is the key earnings engine and the most important source of uncertainty. In 1Q, segment organic sales fell 1% as North American retail weakness more than offset positive outdoor preseason sell-in, international growth, and strong U.S. commercial-and-industrial demand.
For 2Q, management expected low-single-digit organic growth, helped by:
The risk is that 1Q’s outdoor preseason shipments do not translate into healthy consumer sell-through. Last year’s 2Q was hurt by a slow outdoor buying season, so the comparison is favorable—but that also raises the bar for evidence that the recovery is demand-led rather than merely inventory/channel timing.
What to listen for - North American retail point-of-sale and inventory commentary; - Outdoor sell-through, especially ride-on and zero-turn mowers; - DEWALT performance in professional, commercial, and industrial channels; - Whether STANLEY has returned to growth as management anticipated by mid-year; - Volume growth versus price: a pricing-led quarter with weak volume would be less reassuring.
SWK closed the sale of CAM to Howmet Aerospace on April 6 for $1.8 billion of cash, generating roughly $1.57 billion of net proceeds after estimated taxes and fees. Management said it used the vast majority for debt repayment during 2Q.
The sale removes roughly $110 million of quarterly revenue and about $15 million of quarterly pretax operating profit from 2Q comparisons. However, management expects lower interest expense to offset the lost operating profit on adjusted EPS. Therefore:
SWK’s targeted year-end net-debt-to-adjusted-EBITDA level is approximately 2.5x. The board has authorized $500 million of buybacks, and management has indicated that repurchases are the preferred near-term use of excess capital after maintaining investment-grade credit metrics.
The remaining Engineered Fastening business had a strong 1Q: organic sales grew 7%, driven by aerospace and automotive, and adjusted segment margin expanded 190 bps to 12.0%. The CAM divestiture removes a strong aerospace asset, so this quarter is an early indication of the quality of the remaining portfolio.
Key variables include:
Management’s full-year framework calls for low- to mid-single-digit organic growth and margin expansion in Engineered Fastening. A solid result would reinforce the idea that SWK can improve margins without relying on the divested aerospace business.
Management’s April outlook assumed that tariff-policy changes would be a net 2026 tailwind relative to prior internal assumptions, but that this benefit would be broadly offset by inflation in resins, freight, battery metals, and tungsten.
Its working assumption was that Section 301 tariffs would be reinstated at levels broadly comparable with prior IEEPA tariffs by August. Section 232 changes were expected to be immaterial to 2026 guidance, with less than a $10 million 2026 impact.
The key question is whether SWK’s mitigation plan remains on track:
Any suggestion that tariffs, commodity inflation, or price competition have worsened could threaten the margin cadence embedded in full-year guidance.
SWK reaffirmed its full-year 2026 adjusted EPS guidance of $4.90–$5.70, with a midpoint of $5.30. It also reaffirmed:
At the midpoint, after 1Q adjusted EPS of $0.80 and the 2Q midpoint guide of $1.20, approximately $3.30 of adjusted EPS—or more than 60% of the full-year midpoint—remains weighted to 2H26. That concentration makes management’s confidence in the margin ramp, consumer/pro demand, pricing, and tariff mitigation at least as important as the 2Q print itself.
SWK closed at $94.21 on July 28, up about 20% from the day before its 1Q report and about 24% from the post-1Q-report close. The strong run-up suggests that expectations now include tangible evidence of a successful margin recovery and cleaner capital allocation—not simply an in-line quarter.
This report is principally a test of whether SWK’s transformation is moving from promised margin recovery to demonstrated margin recovery. The reported sales comparison will be muddied by the CAM divestiture, so investors should prioritize:
An in-line EPS result without a convincing margin print may not be enough after the stock’s strong pre-report move. Conversely, delivery on the 2Q margin algorithm and firm back-half guidance would further validate SWK’s earnings-power recovery story.
Source basis: Stanley Black & Decker 1Q26 earnings release and conference-call transcript (April 29, 2026); 2Q26 earnings-date announcement (June 23, 2026); June 2026 credit-facility filing; 2Q25 earnings release; and historical SWK closing-price data.