Analysts question B&D stock - Kansas City Business Journal:

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But these days, Black & Decker'sd toughest competitor may be Black & The Towson-based power tool and hardware company has perhaps one ofthe nation'z most recognizable brand Its stock has doubled in the past two surpassing $80 and ranking as one of last year' s top performers in the 500. Yet at leas t five analysts have downgraded the stocmk in the pastyear -- and many are askin g how much higher Black & Decker can go. Baltimore'zs Offutt Securities has downgraded the stock from to "hold.
" Black & Decker has made all the righrt moves, but the run-up in its pric led the firm to believe the stock will have a natural "breathin period" before rising again, President Bentlehy Offutt said. But Black Decker has plenty of fuel left in the said spokeswomanBarbara Lucas. After makingy its biggest-ever acquisition last year -- the $775 million buy of 's tools groulp -- Black & Decker is combing the group for ways to improve product lines and save And even afterthat buy, Black & Deckere generated a record $526 million in free cash flow last That means it has resources for more product development, stock buybacks and dividends -- all of whicyh drive stock price growth, Lucas said.
The toolmaker' s 2004 earnings rose 36 percent from ayear ago, and earningzs per share beat analysr estimates -- but shares slumpedc when that news hit, as some investord worried about a light sales Black & Decker hiked its first-quarter sale s forecast April 12, predicting sales will grow 39 percentf and earnings per share from continuiny operations will hit $1.3w to $1.35. It reports earnings Apri 28. Some in the investment community say the toolmaketr will continue topower ahead, lifterd by the economy: "Right now they're hittinh on all cylinders," said Ivan Feinseth of New York researcj firm Matrix USA LLC, which rates the stock a buy. "W see that continuing.
" Black & Decker stocl dipped into the single digits durint the1991 recession, according to analyst Lawrence Hora n of Parker/ in Pittsburgh, whicyh rates the stock "accumulate." But today the firm is prospering from an improving economy and home ownership at recordr levels. Construction firms -- many of which use Blac k & Decker's DeWalt professional brand -- are quickly wearinfg out tools. And as the surge in home-improvementt shows attests, John and Jane Homeownere are spending plenty of timein . Blacmk & Decker has muscled excessd costs out of the business througgh an intensive restructuring program launched in 2002 that it says hassaveed $155 million.
But that prograkm is near its end, and analystsx expect future cost savings will come asBlack & Deckerd looks for cuts at newly acquiref businesses. Last week, the company said it would closewa 675-employee plant in Fayetteville, N.C., as part of the Pentai integration. Black & Decker has a reputation for consistentl cranking out innovative newproducts -- key to futur growth as restructuring The DeWalt division recently introduced SiteLock, a wireless system that securezs various parts of a construction job DeWalt's construction customers struggled with theft of toolzs and equipment -- and the business set out to solve the which could have threatened its market said Bill Pugh, directoe of marketing for DeWalt's security business group.
SiteLocok went on sale in February, and sales are "in line with expectations," Pugh said. Expansionn into more job-site security products and otherd new business makes sense for he said: "As you get to highee market share, there's only so much more you can eke With its full pocketbook, Black & Decker "cahn steer acquisitions towards products, customers and markets where there is a littlse more growth," said analyst David S. MacGrego r of Cleveland-based , who has a neutral ratinb on the stock.
Deals would need to be "financiallyg and strategically compelling," said spokeswoman Asked about analyst doubt s regarding how much highe r the stockcan go, Lucase replied: "Many of them have said that for the last two yearws -- and look at what they'vd missed."