The Black & Decker Corp (BDK)

Black and Decker co-founded by S. Black and Alonzo Decker in 1910, has its business divided into three major segments. Power tools, hardware - home improvement and fastening - assembly system. The Company is a market leader generating close to 40% of the industry revenues, of which power tools segment generate major portion through its top performing brands like Kwikset and Weiser Lock.

New and existing household sales along with household remodeling activity are the major drivers of the company’s revenue. BDK derives 20% of its revenues from new housing construction in US, however new housing construction has been facing slow down. National Association of Realtors project that existing home sales will decline by 4.7% to 6.74 million homes in 2006, down from a record 7.07 million in previous year, and this trend is expected to continue in 2007.

The Company’s accomplishing double digit sales growth can be accredited to its strategy through aggressive acquisitions and repurchase of common stock. However, absence of such strategy should see company’s performance slowing down.

Further, BDK is highly debt leveraged compared to its peers, with dormant sales in recent past, along with mounting prices of materials, company’s margins are declining. If such trend prolongs company might face trouble to service their debt. Along with slower remodeling activity and alarming inventory levels, BDK seems on its way to a down trend.