Stanley Black & Decker SWK FAIRLY VALUED Buying Index™ 5

Valuentum Retail Equity Research Ratings as of 9-Oct-2021 Data as of 8-Oct-2021

Buying Index™ 5 Value RatingEconomic CastleVery Attractive

Investment ConsiderationsDCF ValuationRelative Valuation

Stock Chart (weekly) ValueCreation™ValueRisk™ValueTrend™Cash Flow GenerationFinancial LeverageGrowthTechnical EvaluationRelative StrengthMoney Flow Index (MFI)Upside/Downside Volume (U/D)Near-term Technical Resistance, 10-wk MADCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™

ValueRisk™ Very Poor Poor Good ExcellentCompany Vitals Investment HighlightsMarket Cap (USD) $27,631Avg Weekly Vol (30 wks) 4,81130-week Range (USD) 172.4 - 225Valuentum Sector Industrials5-week Return -6.0%13-week Return -11.5%30-week Return -10.0%Dividend Yield % 1.8% Firms that generate economic profits with little operating variability score near the top right of the matrix.

Dividends per Share 3.16 Relative Valuation Forward P/E PEG Price / FV

Forward Dividend Payout Ratio 26.9% Danaher 31.3 2.7 100.7%Est. Normal Diluted EPS 12.21 Honeywell 26.6 1.9 89.6%P/E on Est. Normal Diluted EPS 14.5 Lockheed Martin 15.8 1.3 83.2%Est. Normal EBITDA 3,148 Union Pacific 21.5 2.0 115.8%Forward EV/EBITDA 10.6 Peer Median 24.1 1.9 95.1%EV/Est. Normal EBITDA 10.2 Stanley Black & Decker 15.1 2.5 100.2%Forward Revenue Growth (5-yr) 7.3% Price / FV = Current Stock Price divided by Estimated Fair Value

Forward EPS Growth (5-yr) 8.9% Financial Summary ProjectedNMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year

Fiscal Year End: Dec-19 Dec-20 Dec-21

Returns Summary 3-year Historical Average Revenue 14,442 14,535 17,311Return on Equity 11.9% Revenue, YoY% 3.3% 0.6% 19.1%Return on Assets 4.5% Operating Income 1,798 1,878 2,356ROIC, with goodwill 12.6% Operating Margin % 12.4% 12.9% 13.6%ROIC, without goodwill 36.5% Net Income 956 1,233 1,828ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 6.6% 8.5% 10.6%Leverage, Coverage, and Liquidity Diluted EPS 6.35 7.91 11.73In Millions of USD Diluted EPS, YoY % 59.1% 24.6% 48.2%Total Debt 4,247 Free Cash Flow (CFO-capex) 1,081 1,674 1,948Net Debt 2,866 Free Cash Flow Margin % 7.5% 11.5% 11.3%Total Debt/EBITDA 1.7 In Millions of USD (except for per share items)

Net Debt/EBITDA 1.2 LARGE-CEBITDA/Interest 11.0 GOODCurrent Ratio 1.3Quick Ratio 0.3

Stanley Black & Decker SWK FAIRLY VALUED

High

• Stanley Black & Decker provides power and handtools, mechanical access solutions, and electronicsecurity and monitoring systems for various industrialapplications. The firm generates ~60% of its revenuein the US and its ‘Tools & Storage’ segment is itslargest by sales. The company traces its roots back tothe 1840s and is headquartered in Connecticut.

Low

EXCELLENTLOW

WEAKOVERSOLD

$142.00 - $212.00 Estimated Fair Value Sector

MODEST

STRONGPOSITIVE

MEDIUM

1Very High

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Structure of the Machinery & Tools IndustryThe machinery and tools industry is fragmented and highly competitive. Most constituents offer a wide range of products in a myriad of markets. Firms are heavily exposed to fluctuating raw material prices (steel, resins, chemicals) and the vicissitudes of the global economic cycle, including customer capital/maintenance budgets. Several companies are recognized worldwide for their strong brand names and reputation for quality, innovation and value, and we view such attributes as material competitive advantages. Though pricing competition is not absent, we like the structural characteristics of the group.

Fair Value Range

Stanley Black & Decker is navigating inflationary headwinds along with logistical and labor hurdles as best it can, leaning on its brand strength and related pricing power to offset those headwinds, to a degree.

Investment Style Industry $177.00

NEUTRAL

LARGE-CAP CORE Industrials Industrial Leaders

FAIRLY VALUED

NEUTRAL

Medium

• Stanley Black & Decker’s e-commerce and home &garden initiatives have had a favorable impact on its'Tools & Storage' segment. The firm’s ‘Industrial’segment is benefiting from the electrification ofeverything trend, and its ‘Security’ segment isbenefiting from favorable health and safety trends.

• Stanley Black & Decker has undergone a notabletransformation since the turn of this century from asmall cap buildings products firm to a large capdiversified industrial company. Past acquisitions haveplayed a key role in this transformation, as has organicgrowth initiatives. The firm is seeking growthopportunities in emerging markets.

----- Actual -----

• Stanley Black & Decker is a Dividend Aristocrat thathas paid a dividend consecutively for 140+ years andhas increased it in over the past 50+ consecutive years(since 1968). Its annual free cash flows averaged justunder $1.2 billion from 2018-2020.

The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar).

NMF = Not Meaningful

BEARISH

• Stanley merged with Black & Decker in 2010 andcreated a firm with tremendous brand strength.Recent inflationary headwinds, with an eye towardsrising commodity, labor, and freight expenses, need tobe monitored going forward.

186.00

Visit us at www.valuentum.com

147.00

157.00

167.00

177.00

187.00

197.00

207.00

217.00

227.00

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Page 1

Valuentum Retail Equity Research (10=best) Data as of 8-Oct-2021


Economic Profit Analysis

ValueCreation™ EXCELLENT Return on Invested Capital (ROIC)

ROIC - WACC Spread, 3-year historical average 27.7%ROIC - WACC Spread, 5-year projected average 113.7%These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC.

ValueTrend™ POSITIVE

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC.

ROIC CalculationFiscal Year End: Dec-18 Dec-19 Dec-20

Earnings before InterestOperating Income after Depreciation 1,679 1,798 1,878- Adjusted Taxes (at 15% of EBIT) 252 270 282+ Amortization 175 187 202+ Non-cash Operating Items 125 -12 209- Minority Interest 1 2 1Earnings before Interest 1,727 1,701 2,006

Cost of Equity Invested CapitalRisk Free Rate Assumption Inventories 2,374 2,255 0Fundamental Beta (ERP multiplier) + Receivables 1,608 1,455 0Estimated Equity Risk Premium + Current Deferred Income Taxes 0 0 0Cost of Equity Assumption + Other Current Assets 299 449 4,655

+ Property, Plant and Equipment, Net 1,915 1,960 2,054After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 8,957 9,238 10,038Risk Free Rate Assumption + Intangibles 3,484 3,622 0Synthetic Credit Spread + Non Current Deferred Income Taxes 0 0 0Cost of Debt Assumption - Accounts Payable 2,233 2,088 0Cash Tax Rate Assumption - Other Current Liabilities 1,390 1,978 4,556After-tax Cost of Debt Assumption

Invested Capital, with goodwill 15,014 14,913 12,191Cost of Preferred Stock Invested Capital, without goodwill 6,057 5,675 2,153Preferred DividendsValue of Preferred Stock Return on Invested Capital, with goodwill 11.7% 11.4% 14.8%Cost of Preferred Assumption Return on Invested Capital, without goodwill 29.1% 29.0% 51.3%

In Millions of USD

Weighted Average Cost of Capital (WACC)ERP = Equity Risk Premium

Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance of a company's operations, as in the case of companies with negative invested capital.


8.8%


5.4%

4.3%

0

6.3%15.0%

1,5000.0%

9.8%

$177.00 $142.00 - $212.00 LARGE-CAP CORE

Stanley Black & Decker receives a ValueTrend™ rating of POSITIVE, which is basedon the company's trailing three-year performance. The firm's ROIC (excludinggoodwill) increased to 51.3% last year from its trailing 3-year average of 36.5%. Weexpect ROIC (excluding goodwill) to be in the ballpark of about 137% by the end ofour discrete forecast period, with upside potential to about 156% over that time period.

The best measure of a firm's ability to create value for shareholders is expressed bycomparing its return on invested capital (ROIC) with its weighted average cost ofcapital (WACC). The gap or difference between ROIC and WACC is called the firm'seconomic profit spread. Stanley Black & Decker's 3-year historical return on investedcapital (without goodwill) is 36.5%, which is above the estimate of its cost of capital of8.8%. As such, we assign the firm a ValueCreation™ rating of EXCELLENT. In thechart to the right, we show the probable path of ROIC in the years ahead based on theestimated volatility of key drivers behind the measure. The solid grey line reflects themost likely outcome, in our opinion, and represents the scenario that results in our fairvalue estimate.

Industrials Industrial Leaders Estimated Fair Value Fair Value Range Investment Style Sector Industry

4.3%2.00%

---------- Actual ----------

0.96.5%

156.3%136.5%

29.1% 29.0%

51.3%

116.8%

WACC, 8.8%0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

82.8%

12.7%Equity

Debt

Preferred

Capital Structure

Page 2



Growth Analysis

Revenue Growth MODEST Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

Revenue3-year Historical

CAGR5-year Projected

CAGRStanley Black & Decker USD 14,535 4.5% 7.3%

Danaher USD 22,284 12.8% 13.2%

Honeywell USD 32,637 -7.0% 7.2%

Lockheed Martin USD 65,398 8.6% 4.0%

Union Pacific USD 19,533 -2.8% 6.5%

Peer Median 2.9% 6.9%

Industry Median 2.0% 7.3%

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

EBITDA3-year Historical

CAGR5-year Projected

CAGRStanley Black & Decker USD 2,457 2.6% 5.2%

Danaher USD 6,006 17.6% 22.9%

Honeywell USD 6,698 -6.8% 16.3%





In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year Net Income

3-year Historical CAGR

5-year Projected CAGR

Stanley Black & Decker USD 1,233 0.2% 8.9%

Danaher USD 3,646 19.2% 20.4%

Honeywell USD 4,779 42.4% 16.5%





In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.


Stanley Black & Decker's revenue expansion has been greater than the median of bothits peer group and industry group during the past three years. We expect the firm'srevenue expansion to outpace the median of its peer group and industry group duringthe next five years. Our growth assessment of each firm is based on the firm's 5-yearforward revenue CAGR. Stanley Black & Decker's future pace of revenue growth isMODEST, in our opinion.

Stanley Black & Decker's EBITDA expansion has trailed that of its peer group but hasbeen greater than that of its industry group during the past three years. We expect thefirm's pace of EBITDA growth to fall below that of both its peer group and industrygroup during the next five years. Danaher sports the highest expected EBITDA growthrate among peers.

Stanley Black & Decker's net income expansion has trailed both that of its peer groupand its industry group during the past three years. We expect the firm's pace of netincome growth to fall below that of both its peer group and industry group during thenext five years. Danaher sports the highest expected net income growth rate amongpeers.


$177.00 $142.00 - $212.00 LARGE-CAP CORE Industrials Industrial Leaders Estimated Fair Value Fair Value Range Investment Style Sector Industry

13,982 14,442 14,535

22,179

20,71319,248

0

5,000

10,000

15,000

20,000

25,000

2,1862,358 2,457

3,349

3,1632,976

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

605

956

1,233

2,451

1,885

1,319

0

500

1,000

1,500

2,000

2,500

3,000

Page 3



Cash Flow and Financial Leverage AnalysisCash Flow Generation STRONG Financial Leverage MEDIUM

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA. The red line shows the firm's normalized measure.

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year CFO


5-year Projected CAGR


Danaher USD 6,208 21.3% 17.5%

Honeywell USD 6,208 1.3% 13.6%


Union Pacific USD 8,540 5.7% 9.0%



In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year FCF


5-year Projected CAGR Source: Company Filings, Valuentum Projections


Danaher USD 5,417 23.1% 17.1%

Honeywell USD 5,302 2.4% 15.0%


Union Pacific USD 5,613 12.0% 11.9%



In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases.


Firms that generate a free cash flow margin (free cash flow divided by total revenue)above 5% are usually considered cash cows. Stanley Black & Decker's free cash flowmargin has averaged about 8.2% during the past 3 years. As such, we think the firm'scash flow generation is relatively STRONG. The free cash flow measure shown aboveis derived by taking cash flow from operations less capital expenditures and differsfrom enterprise free cash flow (FCFF), which we use in deriving our fair value estimatefor the company. For more information on the differences between these two measures,please visit our website at Valuentum.com. At Stanley Black & Decker, cash flow fromoperations increased about 60% from levels registered two years ago, while capitalexpenditures fell about 29% over the same time period.

LARGE-CAP CORE Industrials $177.00


Stanley Black & Decker's cash flow from operations expansion has been greater thanthat of both its peer group and industry group during the past three years. We expect thefirm's pace of cash flow from operations growth to fall below that of both its peer groupand industry group during the next five years. Danaher sports the highest expected cashflow from operations growth rate among peers.

Stanley Black & Decker's free cash flow expansion has been greater than that of bothits peer group and industry group during the past three years. We expect the firm's paceof free cash flow growth to fall below that of both its peer group and industry groupduring the next five years. Danaher sports the highest expected free cash flow growthrate among peers.

Fair Value RangeIndustrial Leaders $142.00 - $212.00

Firms that exhibit high leverage tend to be more risky than firms with relatively lowdebt loads, all else equal. We measure financial leverage by taking a firm's currenttotal debt load and dividing it by the firm's trailing average 3-year annual EBITDA.Firms that are over 3 for this metric, we rate as having high leverage. Companies thathave less than 1.5 turns of leverage (or a measure below 1.5), we rate as having lowleverage. Stanley Black & Decker's normalized debt-to-EBITDA measure of about1.82 puts it in the MEDIUM camp.

Estimated Fair Value Sector IndustryInvestment Style

1,2611,506

2,022

492 425 348

7691,081

1,674

Dec-18 Dec-19 Dec-20

Cash from Operations Capital Expenditures Free Cash Flow

Stanley Black & Decker - normalized

leverage, 1.82

0

2

4

12/31/2018 12/31/2019 12/31/2020

Stanley Black & Decker- annual leverageStanley Black & Decker - normalized leverage

1,2611,506

2,022

3,143

2,612

2,080

0

500

1,000

1,500

2,000

2,500

3,000

3,500

769

1,081

1,674

2,572

1,994

1,416

0

500

1,000

1,500

2,000

2,500

3,000

Page 4



Valuation Analysis

Valuation Assumptions Valuation BreakdownIn Millions of USD (except for per share items)

Revenue CAGR %Avg. EBIT Margin %Avg. Cash Tax Rate %Earnings Before Interest CAGR %Earnings Per Share CAGR %Free Cash Flow to the Firm CAGR %Earnings before interest = Net operating profits less adjusted taxes

Phase II --> III FCFF CAGR % 2.2% (II) 3% (III)Cost of Equity %After-tax Cost of Debt %Discount Rate (WACC) %Synthetic credit spread = 2%

Phase I Present ValuePhase II Present ValuePhase III Present ValueTotal Firm Value

Net Balance Sheet Impact

Total Equity ValueDiluted Shares OutstandingFair Value per Share

DCF Valuation Summary Enterprise Free Cash FlowFiscal Year End: 12/31/2018 12/31/2019 12/31/2020

1,727 1,701 2,006331 373 377492 425 348

77 -714 356 - Acquisitions 525 685 1,324

965 1,677 356In Millions of USD

Source: Company Filings, Valuentum Projections

Company NameValuentum Buying

Index™Forward Price-to-

Earnings

Price/Earnings-to-Growth (PEG), 5-

yearEV/Est. Normal

EBITDA

5-year Forward Earnings per Share CAGR

3-year Hist Avg ROIC, without

goodwillDividend Yield

%

Stock Price / Fair Value Estimate

Stanley Black & Decker 5 15.1 2.5 10.2 8.9% 36.5% 1.8% 100.2%

Danaher 3 31.3 2.7 16.8 21.6% 32.0% 0.3% 100.7%

Honeywell 3 26.6 1.9 14.5 17.1% 49.2% 1.7% 89.6%

Lockheed Martin 4 15.8 1.3 9.5 7.0% 43.9% 3.2% 83.2%

Union Pacific 7 21.5 2.0 11.9 14.0% 13.1% 2.0% 115.8%

Peer Median 3.5 24.1 1.9 13.2 15.5% 38.0% 1.8% 95.1%

Industry Median 4.0 21.5 1.9 11.5 14.9% 31.8% 1.6% 102.9%

Fair Value Range


8.9%

---------- Actual ----------

26.5

19.4

17.2

17.2

14.5

P/E on Est. Normal Diluted EPS

13.4

Long-term Projections

9.8%

16.4


8,55313,349

View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.

IndustryInvestment Style Sector

- Capital Expenditures

Estimated Fair Value

8.8%

In the chart below, we show the build up to our estimate of total enterprise value forStanley Black & Decker and the break down to the firm's total equity value, whichwe estimate to be about 27.55USD billion. The present value of the enterprise freecash flows generated during each phase of our model and the net balance sheetimpact is displayed. We divide total equity value by diluted shares outstanding toarrive at our $177 per share fair value estimate.

31,919

20.2

18.9

11.7

13.9

5-year Projections

Forward EV/EBITDA

- Change in Working Capital

Enterprise Free Cash Flow (FCFF)

Our future forecasts for key valuation drivers result in a future free enterprise cashflow stream. Above, we show how we calculate enterprise free cash flow and thehistorical performance of the metric for Stanley Black & Decker. Over the next fiveyears, we expect the firm's enterprise free cash flow to expand at about a 44%compound annual growth rate. During years 6 through 20, we expect the measure togrow at a 2.2% rate. Beyond year 20 (in perpetuity), we grow the firm's free cashflow at inflation (3%).

7.3%12.7%

-4,366

Earnings before Interest

27,553

We think Stanley Black & Decker is worth $177 per share with a fair value range of$142.00 - $212.00. The margin of safety around our fair value estimate is driven by thefirm's LOW ValueRisk™ rating, which is derived from an evaluation of the historicalvolatility of key valuation drivers and a future assessment of them. Our near-termoperating forecasts, including revenue and earnings, do not differ much from consensusestimates or management guidance. Our model reflects a compound annual revenuegrowth rate of 7.3% during the next five years, a pace that is higher than the firm's 3-year historical compound annual growth rate of 4.5%. Our model reflects a 5-yearprojected average operating margin of 12.7%, which is above Stanley Black & Decker'strailing 3-year average. Beyond year 5, we assume free cash flow will grow at an annualrate of 2.2% for the next 15 years and 3% in perpetuity. For Stanley Black & Decker,we use a 8.8% weighted average cost of capital to discount future free cash flows.

In Millions of USD

Results

15.0%

10.6

+ Depreciation

4.9%

10,016

$142.00 - $212.00 LARGE-CAP CORE Industrials

155.9

43.5%

$177.00

18.3

Company Metrics versus Peer and Industry Medians

12.0

2.4%

Industrial Leaders $177.00

8,553

13,349

10,0164,366

27,553

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Yr 1-5 Yr 6-20 Perpetuity Net Balance SheetImpact

Equity Value

Page 5



Margin of Safety Analysis

Range of Potential Outcomes ValueRisk™ LOW

Revenue Volatility 5.7%Gross Margin Volatility 2.2%Earnings (EBI) Volatility 11.6%Cash Flow (FCFF) Volatility Greater than 50%Fair Value Range 20.0%The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside ProbabilitiesProbability (fair value < $0) Less than 0.1%Probability (fair value > 2x current share price) 0.00%

Future Path of Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.

Our discounted cash flow process values each firm on the basis of the present value ofall future free cash flows. Although we estimate the firm's fair value at about $177 pershare, every company has a range of probable fair values that's created by theuncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in themarkets as stocks would trade precisely at their known fair values. Our ValueRisk™rating sets the margin of safety or the fair value range we assign to each stock. In thegraph above, we show this probable range of fair values for Stanley Black & Decker.We think the firm is attractive below $142 per share (the green line), but quiteexpensive above $212 per share (the red line). The prices that fall along the yellow line,which includes our fair value estimate, represent a reasonable valuation for the firm, inour opinion.

We estimate Stanley Black & Decker's fair value at this point in time to be about $177per share. As time passes, however, companies generate cash flow and pay out cash toshareholders in the form of dividends. The chart to the right compares the firm's currentshare price with the path of Stanley Black & Decker's expected equity value per shareover the next three years, assuming our long-term projections prove accurate. The rangebetween the resulting downside fair value and upside fair value in Year 3 represents ourbest estimate of the value of the firm's shares three years hence. This range of potentialoutcomes is also subject to change over time, should our views on the firm's future cashflow potential change. The expected fair value of $223 per share in Year 3 representsour existing fair value per share of $177 increased at an annual rate of the firm's cost ofequity less its dividend yield. The upside and downside ranges are derived in the sameway, but from the upper and lower bounds of our fair value estimate range.

$142.00 - $212.00Sector Fair Value Range Investment Style

LARGE-CAP CORE Estimated Fair Value

$177.00



We strive to answer a few questions that investors often ask: 1) What are the chancesof a total loss of investment in this company? and 2) What is the chance that thecompany is really worth twice what I paid for it? The probability (fair value < 0)strives to answer the first question. It indicates the chance that the firm mayencounter insolvency based on the characteristics of its cash flow stream, capitalstructure, and risk profile. The probability (fair value > 2x current share price) strivesto answer the second question. It is our best estimate of whether investors areparticipating in a half-off sale by buying the company's shares at current prices.

IndustryIndustrial Leaders

Stanley Black & Decker receives a ValueRisk™ rating of LOW based of thehistorical volatility of key drivers of economic value creation. The fair value rangesets the margin of safety around our fair value estimate of the firm's shares.

Industrials

$142

$177

$212

0 50 100 150 200 250 300 350

$267

$223Current Share Price, $177

$179

$0

$50

$100

$150

$200

$250

$300

Current Share Price Yr 1 Fair Value Yr 2 Fair Value Yr 3 Fair Value

Page 6



Technical Analysis

Technical Evaluation NEUTRAL Money Flow Index (MFI) OVERSOLD

30-week Price and Volume Chart (weekly)Relative Price Strength WEAK

5-week Company Performance -6.0%5-week Market Benchmark Performance -0.6%5-week Relative Performance vs. Market Benchmark -5.4%13-week Company Performance -11.5%13-week Market Benchmark Performance -7.9%13-week Relative Performance vs. Market Benchmark -3.5%30-week Company Performance -10.0%30-week Market Benchmark Performance -15.3%30-week Relative Performance vs. Market Benchmark 5.3%

Upside/Downside Volume BEARISH Timeliness Matrix™ Equity Valuation

Relative Strength

Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix.

Neutral

Estimated Fair Value Fair Value Range

Overvalued

Industry $177.00

UndervaluedFairly Valued

Investment Style

The Money Flow Index (MFI) is an oscillator that uses price and volume to measurebuying and selling pressure. Chartists often look for overbought (above 80) andoversold (below 20) levels to warn of unsustainable near-term price extremes. StanleyBlack & Decker's MFI of 12 indicates an OVERSOLD position and a high likelihoodof a short-term pop in the stock. The firm's shares have fallen too far too fast. TheMFI can also be used to gauge the strength or weakness of a firm's price trend. InStanley Black & Decker's case, we think its price has reached an unsustainable near-term price extreme, trumping the presence of any near-term divergences between itsstock price and money flow action.

The firm's near-term moving average (5-week, grey line) and medium-term movingaverage (13-week, red line) are shown in the chart above. Typically, when a shorter-term moving average crosses a medium- or longer-term moving average from below, itrepresents a bullish signal. If the short-term moving average crosses from above, tradersoften view this as bearish. Stanley Black & Decker's 5-week moving average is belowits 13-week measure, indicating a bearish trend. However, the oversold position on thefirm's Money Flow Index (MFI) indicates a short-term pop in the stock may be aroundthe corner. We're NEUTRAL on the firm's technicals for now.

Strong


Weak


The level and trend of the Upside/Downside (U/D) volume ratio reveals whetherinstitutional participation has been bullish or bearish as of late. Stanley Black &Decker's U/D volume ratio of 0.4 is not only less than 1 but also is lower than itstrailing average, indicating BEARISH institutional interest during the past severalweeks.

SectorIndustrials

In the chart above, we pinpoint the heaviest accumulation or distribution week of thefirm, determined by the week with the highest trading volume during the past 30 weeks.A heavy accumulation (buying) or distribution (selling) week often determines thefuture near-term direction of the firm's share price, as money managers continue tomove in or out of the stock in the days and weeks ahead driving the stock up or down,respectively. For Stanley Black & Decker, the week with the highest trading volume outof the last 30 weeks was a week of heavy buying, or accumulation (green bar). Suchmarket activity could indicate a reversal of a downtrend or further confirmation of thefirm's uptrend.

A firm's relative price strength can be assessed over any number of time horizons. Weshow the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below.In arriving at our relative strength rating for each company, we assess the past 13weeks, which includes the market's reaction to the firm's most recently reportedquarter, where applicable, and other more recent economic events. During the past 13weeks, Stanley Black & Decker's shares returned -11.5%, while the marketbenchmark returned -7.9%. We think Stanley Black & Decker's 13-week relativeprice performance is WEAK.

Industrial Leaders $142.00 - $212.00 LARGE-CAP CORE

1Companies that are undervalued and showing near-term relative price strength couldrepresent timely buys, as the stock may be attractive to both value and momentuminvestors. A cross section of the firm's equity valuation and its relative share pricestrength is shown in the matrix above. We tend to prefer undervalued stocks that have strong pricing momentum, also called Valuentum stocks.

147157167177187197207217227

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

5-week Moving Average 13-week Moving

Average

Stock Price

162

172

182

192

202

212

222 Overbought Line

Oversold Line

75

12

0102030405060708090

1.1

0.4

Average, 0.7

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

- 10-week Moving Average

Page 7



Pro Forma Income Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

Total Revenue 13,982 14,535

Cost of Goods Sold 9,131 9,567

Selling, General and Administrative Expenses 3,172 3,049

Other Operating Expenses 0 41

Operating Income 1,679 1,878

Unusual items 0 0

Operating Income, including unusual items 1,679 1,878

Interest Expense (278) (223)

Other Non-operating Income (379) (380)

Pre-tax Income 1,022 1,275

Income Taxes 416 41

Income after tax 606 1,234

Minority Interest and Equity Income (1) (1)

Net Income, excluding extra items 605 1,233

Income Available to Common, excluding extra items 605 1,233

Diluted Earnings per Share, excluding extra items 3.99 7.91

Diluted Weighted Shares Outstanding 151.6 155.9

Source: Company Filings, Xignite, Valuentum Projections

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

Dec-19

9,637

3,008

0


1,955

161

Fair Value Range Investment Style

14,442

48

3,603

11,304

1,798

Industrials Industrial Leaders

1,119

1,829

(2) (1) (1)

1,956

(394)

Dec-21

0

155.9

2,356

18,956

0

12,434

3,963

53

1,828

2,301

345

2,151

18

2,356

323

1,955

12.54

956 1,828

11.736.35

958

150.6


Estimated Fair ValueLARGE-CAP CORE

Sector Industry $177.00 $142.00 - $212.00

956

155.9

2,506

18

0

(223)

Dec-22

1,798

17,311

(284)

2,506

(223)

---------- Projected ----------

Page 8



Pro Forma Balance Sheet -------------------- Historical --------------------


AssetsTotal Cash (including marketable securities) 289 1,381Inventory 2,374 0Accounts Receivable 1,608 0Other Current Assets 299 4,655Total Current Assets 4,569 6,036

Gross Fixed Assets 3,970 4,680(Accumulated Depreciation) (2,055) (2,626)Net Property, Plant, and Equipment 1,915 2,054

Goodwill, Net 8,957 10,038Intangibles, Net 3,484 0Other Long-term Assets 482 5,438Total Assets 19,408 23,566

LiabilitiesAccounts Payable 2,233 0Other Current Liabilities 1,390 4,556Current Portion of Long-term Debt 379 2Total Current Liabilities 4,002 4,558

Long-term Debt 3,820 4,245Other Long-term Liabilities 3,750 3,703Total Liabilities 11,572 12,506

Preferred Stock 750 1,500

Shareholders' EquityCommon Stock and Additional Paid in Capital 6,661 5,275Retained Earnings 4,621 7,548Other Equity (4,196) (3,263)Total Shareholders' Equity 7,836 11,060

Total Liabilities and Shareholders' Equity 19,408 23,566


Sector

1,336 2,883

449 4,655 4,655

$142.00 - $212.00Industry

LARGE-CAP CORE

23,755

4,406 4,911 5,332

20,597

459

340

5,202

Industrials

4702,255

Industrial Leaders

Dec-19

Estimated Fair Value Fair Value Range $177.00

Investment Style


298

25,615

214

2 21,978 4,700 4,871

Dec-21 Dec-22

2,088 208

149 326

8,3346,354

4,935 5,275 5,2756,773 8,884 10,323

1,500

11,460 12,859 13,280

0 0

(4,072) (3,263) (3,263)9,136 10,896 12,335

4,457

1,321 5,438 5,438

9,238 10,038 10,0383,622 (202) (404)

20,597 25,615

3,176 4,245 4,2453,878 3,703 3,703


---------- Projected ----------

2,127 2,210

1,455

(3,075) (3,567)1,960

5,776(2,331)4,291


23,755

Page 9



Pro Forma Cash Flow Statement -------------------- Historical --------------------


Cash from OperationsNet Income 606 1,234Depreciation and Amortization 507 579Deferred Income Taxes 191 0Operating Gains Or Losses 125 209Changes in Working Capital (168) 0

Cash Flow from Operations 1,261 2,022

Cash from InvestingPurchase of Property, Plant, Equipment (492) (348)Other Investing Cash Flows (497) (1,229)Cash Flow from Investing (989) (1,577)

Cash from FinancingIssuance (Retirement) of Stock (489) 0Issuance (Retirement) of Debt 446 0Dividends Paid (385) (451)Other Financing Cash Flows (134) 1,067Cash Flow from Financing (562) 616

Foreign Exchange (54) 23

Net Change in Cash (344) 1,084


Investment Style Sector

Dec-19 Dec-21 Dec-22

Industry $177.00 $142.00 - $212.00 LARGE-CAP CORE Industrials Industrial Leaders

Stanley Black & Decker SWK FAIRLY VALUED Estimated Fair Value Fair Value Range

---------- Projected ----------

(784) 0 0

137 0 0

0 0

2,470 2,638

(425) (522)

958 1,829 1,956560

(1,209) (522) (574)

0

0 0(402) (493) (517)

0

651 694

(28)

(574)

1,506

0 0 0(12) 0 0

0 (10) (12)


(517)(493)(293)

3


1,455 1,547

(1) 0

Page 10



Industrial LeadersIndustrial Leaders FAIRLY VALUED

Company Name TickerMarket Cap (USD-

mil) DCF Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

3M MMM 103,020 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Amphenol Corp APH 46,632 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG

AO Smith Corp AOS 10,481 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH NEUTRAL

Boeing BA 129,129 FAIRLY VALUED VERY POOR MEDIUM NEGATIVE BULLISH STRONG

Canadian National CNI 83,378 FAIRLY VALUED GOOD MEDIUM POSITIVE BULLISH STRONG

Caterpillar CAT 107,504 FAIRLY VALUED EXCELLENT LOW NEGATIVE BEARISH STRONG

CNH Industrial CNHI 22,366 FAIRLY VALUED GOOD VERY HIGH POSITIVE VERY BEARISH STRONG

Corning GLW 28,688 FAIRLY VALUED POOR MEDIUM NEGATIVE BEARISH STRONG

CSX Corp CSX 75,364 FAIRLY VALUED GOOD LOW NEGATIVE VERY BULLISH STRONG

Danaher DHR 215,574 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH STRONG

Deere DE 108,629 FAIRLY VALUED EXCELLENT LOW NEGATIVE BEARISH STRONG

Dover DOV 22,949 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH STRONG

Eaton ETN 62,038 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Emerson Electric EMR 58,622 FAIRLY VALUED EXCELLENT LOW NEGATIVE BEARISH STRONG

Expeditors Intl EXPD 19,532 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH NEUTRAL

Fastenal FAST 30,351 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH STRONG

FedEx FDX 59,882 UNDERVALUED GOOD LOW POSITIVE NEUTRAL WEAK

General Dynamics GD 58,190 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

General Electric GE 114,681 FAIRLY VALUED GOOD HIGH NEGATIVE BULLISH STRONG

Honeywell HON 154,828 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Illinois Tool Works ITW 68,880 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Lockheed Martin LMT 99,475 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH NEUTRAL

Northrop Grumman NOC 65,317 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Parker-Hannifin PH 38,066 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Pentair PNR 11,852 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Raytheon Tech RTX 123,044 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Republic Services RSG 40,180 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Roper Technologies ROP 47,733 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH NEUTRAL

Stanley Black & Decker SWK 27,631 FAIRLY VALUED EXCELLENT LOW POSITIVE NEUTRAL WEAK

TE Connectivity TEL 48,362 OVERVALUED EXCELLENT LOW POSITIVE BEARISH STRONG

Union Pacific UNP 147,012 FAIRLY VALUED GOOD LOW NEGATIVE VERY BULLISH STRONG

United Parcel Service UPS 159,021 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

W.W. Grainger GWW 22,406 FAIRLY VALUED EXCELLENT LOW NEGATIVE BEARISH NEUTRAL

Waste Management WM 65,771 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Estimated Fair Value Fair Value Range Investment Style Sector Industry


$177.00 $142.00 - $212.00 LARGE-CAP CORE Industrials Industrial Leaders

Relative Valuation

NEUTRAL

UNATTRACTIVE

NEUTRAL

UNATTRACTIVE

ATTRACTIVE

ATTRACTIVE

NEUTRAL

NEUTRAL

NEUTRAL

UNATTRACTIVE

LARGE-CAP GROWTH

LARGE-CAP VALUE

LARGE-CAP VALUE

LARGE-CAP VALUE

LARGE-CAP CORE

LARGE-CAP CORE

NEUTRAL

ATTRACTIVE

UNATTRACTIVE

ATTRACTIVE

ATTRACTIVE

NEUTRAL

The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.

We think the Industrial Leaders industry is fairly valued at this time. The industry'smarket cap is trading between 80% and 120% of our estimate of its fair value based onour DCF process. Although we use a firm-specific ValueRisk™ measure to determinewhether a firm is undervalued or overvalued based on our DCF process, we consider anindustry to be undervalued if it is trading below 80% of our estimate of its fair valueand overvalued if it is trading at over 120% of our estimate of its fair value. We thinkthese fair value ranges are appropriate given the diversification benefits of holding abasket of stocks. Although there may be individual opportunities within the IndustrialLeaders industry, we don't find the industry as a whole attractive based solely onvaluation.

Shaded blue denotes that the firm has earned the highest rating for that respective category.Investment Style

LARGE-CAP VALUE

LARGE-CAP GROWTH

LARGE-CAP CORE

LARGE-CAP BLEND

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP BLEND

LARGE-CAP CORE

LARGE-CAP GROWTH

LARGE-CAP CORE

MEGA-CAP GROWTH

ATTRACTIVE

LARGE-CAP CORE


LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP CORE

NEUTRAL

NEUTRAL

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP CORE

NEUTRAL

NEUTRAL

UNATTRACTIVE

UNATTRACTIVE

ATTRACTIVE

ATTRACTIVE

NEUTRAL

NEUTRAL

NEUTRAL

LARGE-CAP CORE

NEUTRAL

NEUTRAL

ATTRACTIVE

NEUTRAL

NEUTRAL

UNATTRACTIVE

LARGE-CAP VALUE

100.2%

95.1%

102.9%

90%

92%

94%

96%

98%

100%

102%

104%

Stanley Black & Decker Peer Median Industrial Leaders

Page 11

Valuentum's Full Page Stock Report


BA

G

I

N

C

J

D

M

H

E

L

K

A DCF ValuationShows whether the firm is undervalued, fairly valued, or overvalued based on our DCF process and by how much.

B Valuentum Buying Index (VBI)Provides insight into the timeliness of an investment opportunity. We rank firms from 1 to 10 based on rigorous fiancial, valuation, and technical analysis. A 10 represents one of our top picks.

C Valuentum Value Rating (VVR) Indicates whether we think a firm is undervalued, fairly valued, or overvalued on the basis of our DCF process.

D Investment ConsiderationsEvaluates firms on 12 different measures, from the firm's growth and cash flow generation to the stock's money flow index and upside/downside volume. We reveal technical support and resistance levels.

E 30-week Price and Volume ActionDisplays the last accumulation or distribution week of the stock and historical price and volume action.

G Company VitalsShows sector,industry and other relevant company information.

H Business QualitySummary of the firm's ability to create value for shareholders compared wth the underlying risk of its operations.

I Normalized EPS and EBITDAEstimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

J Investment HighlightsOur opinion of the company, including analysis of its financial and technical strengths and weaknesses.

K Relative ValuationComparison of the firm's PE, PEG, and Price/FV ratios versus peers.

L Returns Summary3-year averages of the firm's key return measures, including return on invested capital, with and without goodwill.

M Leverage, Coverage, and LiquidityA snapshot of the company's financial health.

N Financial SummaryA summary of the proforma financial statements found in the extended report.

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Page 12

UNDERVALUED

FAIRLY VALUED

OVERVALUED

• Revenue Volatility • Margin Volatility • Earnings Volatility • Cash Flow VolatilityThe information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Historical firm-specific financial data generates our ValueCreation™, ValueRisk™, and ValueTrend™ ratings. The data provides the basis for our financial forecasts. The volatility of key valuation drivers are estimated and a margin of safety is determined.

Full annual forecasts of income statement, balance sheet, and cash flow statement items. Firm-specific cost of equity, cost of debt, weighted average cost of capital, and long-term growth and profitability measures estimated.

The firm's stock price is compared to the suggested margin of safety. If a firm's stock price falls below the lower bound of our estimated fair value range, it receives Valuentum's highest Value Rating.

Our analysis doesn’t stop there. We also offer a technicalevaluation of the stock as well as other momentumindicators. We not only want to reveal to readers whichfirms may be undervalued, in our view, but we also wantto provide readers with information to help them assessentry and exit points. Most research publishers focus onarriving at a target price or fair value estimate, but mayfall short of providing a technical assessment to bolsterbuy and sell disciplines. We strive to go the distance andprovide readers with answers--not half the story.

An explanation of our approach would not be complete ifwe didn’t describe our ideal stock idea. We’re lookingfor companies that are undervalued--both on a DCF basisand versus peers--have strong growth potential, have asolid track record of creating economic profits forshareholders with reasonable risk, are strong cash flowgenerators, have manageable financial leverage, and arecurrently showing bullish technical and momentumindicators. For dividend growth ideas, we look forcompanies that have both the capacity and willingness tokeep raising the dividend.

Can such stock ideas exist? Subscribe to Valuentum toreceive our best investment ideas and analysis onhundreds of stocks, dividends, ETFs and more.

@Valuentum, we strive to stand out from the crowd. Mostinvestment research publishers fall into a few camps,whether it be value, growth, income, momentum, chartistor some variant of the aforementioned. We think each inits own right holds merit, but we think the combination ofthese approaches can be even more powerful. After all,stock price movements aren’t just driven by investors ofthe value or growth variety, but by all market participants.Therefore, we look at stocks from a variety of investmentperspectives in order to better understand and identifyideas. We want to provide relevant information.

The core of our process is grounded in rigorous discountedcash flow analysis and incorporates the concept of amargin of safety. We offer a fair value estimate for eachcompany and provide a relative valuation assessment inthe context of a company’s industry and closest peers. Across section of our ValueCreation™ and ValueRisk™ratings provides a financial assessment of a company’sbusiness quality, while our ValueTrend™ rating offersinsight into the trajectory of a firm’s economic profitcreation. The Economic Castle rating measures themagnitude of future economic value generation, and theDividend Cushion ratio assesses the financial capacity of acompany to keep raising its dividend.

A complete three-stage free cash flow to the firm valuation model generates an estimate of the firm's equity value per share based on estimated future free cash flows.

About Valuentum

Financial Forecasts

Financial Statement Analysis

Discounted Cash Flow Valuation

ModelValueRisk™

Rating

Valuentum Value Rating (VVR)

Page 13

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

'bullish' technicals. The firm would need aValueCreation™ rating of 'good' or 'excellent', exhibit'high' or 'aggressive' growth prospects, and generate atleast a 'medium' or 'neutral' assessment for cash flowgeneration, financial leverage, and relative price strength.

This is a tall order for any company. Stocks that don'tmake the cut for a 10 are ranked accordingly, with theleast attractive stocks, in our opinion, garnering a ratingof 1 ("We'd sell"). Most of our coverage universeregisters ratings between 3 and 7, but at any given timethere could be large number of companies garneringeither very high or very low scores, especially at marketlows or tops, respectively.

The Best Ideas Newsletter portfolio puts the VBI intopractice.

@ Valuentum, we like to look at companies from anumber of different perspectives. The Valuentum BuyingIndex (VBI) combines rigorous financial and valuationanalysis with an evaluation of a stock's technicals to derivea rating between 1 and 10 for each company. The VBIplaces considerable emphasis on a company's discountedcash-flow (DCF) valuation, its relative valuation versuspeers (both forward PE and PEG ratios), and its technicalsin order to help readers assess entry and exit points on themost interesting ideas.

Let's follow the red line on the flow chart below to seehow a company can score a 10, the best mark on the index(a "Top Pick"). First, the company would need to be'undervalued' on a DCF basis and 'attractive' on a relativevalue basis. The stock would also have to be exhibiting

DCF FairlyValued

DCF Undervalued

Relative ValueUnattractive/Neutral

Relative Value Attractive

Relative ValueUnattractive/Neutral


Technicals Bearish: 1

Technicals Neutral: 2

TechnicalsBullish: 4

Technicals Bullish: 7

TechnicalsBearish: 6

Technicals >= BullishValueCreation(TM) >= GoodGrowth >= HighCash Flow Generation >= MediumFinancial Leverage <= MediumRelative Strength >= Neutral

Final Score: 10



TechnicalsBearish: 3

Relative Value Unattractive/Neutral











Initial Index Score

DCF Overvalued

Page 14

Glossary

Technical Evaluation. We evaluate a firm's near-term and medium-term movingaverages and money flow index (MFI) to assign each firm a rating along thefollowing scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERYBEARISH.

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firmsthat are trading with an appropriate discount to our fair value estimate receive anUNDERVALUED rating. Firms that are trading within our fair value range receive aFAIRLY VALUED rating, while firms that are trading above the upper bound of ourfair value range receive an OVERVALUED rating.

Investment Style. Valuentum uses its own proprietary stock-classification system.Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million;Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and$10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200billion. Blend: Firm's that we think are undervalued and exhibit high growthprospects (growth in excess of three times the rate of assumed inflation). Value:Firm's that we believe are undervalued, but do not exhibit high growth prospects.Growth: Firms that are not undervalued, in our opinion, but exhibit high growthprospects. Core: Firms that are neither undervalued nor exhibit high growthprospects.

Company Vitals. In this section, we list key financial information and the sector andindustry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio,divides the current share price by last year's earnings (EPS) and then divides thatquotient by our estimate of the firm's 5-year EPS growth rate. The estimatednormalized diluted EPS and estimated normalized EBITDA represent the five-yearforward average of these measures used in our discounted cash flow model. The P/Eon estimated normalized EPS divides the current share price by estimated normalizeddiluted EPS. The EV/estimated normalized EBITDA considers the current enterprisevalue of the company and divides it by estimated normalized EBITDA. EV is definedas the firm's market capitalization plus total debt, minority interest, preferred stockless cash and cash equivalents.

Upside/Downside Volume. Heavy volume on up days and lower volume on down days suggests that institutions are heavily participating in a stock's upward advance. We use the trailing 14-week average of upside and downside volume to calculate an informative ratio. We rank each firm's U/D volume ratio along the following scale: BULLISH, IMPROVING, DETERIORATING, and BEARISH.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Estimated Fair Value. This measure is our opinion of the fair equity value per share ofthe company. If our forecasts prove accurate, which may not always be the case, wemay expect a firm's stock price to converge to this value within the next 3 years.

Fair Value Range. The fair value range represents an upper bound and lower bound,between which we would consider the firm to be fairly valued. The range considers ourestimate of the firm's fair value and the margin of safety suggested by the volatility ofkey valuation drivers, including revenue, gross margin, earnings before interest, andenterprise free cash flow (the determinants behind our ValueRisk™ rating).

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™indicates the firm's historical track record in creating economic value for shareholders,taking the average difference between ROIC (without goodwill) and the firm'sestimated WACC during the past three years. The firm's performance is measured alongthe scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms withEXCELLENT ratings have a demonstrated track record of creating economic value,while those that register a VERY POOR mark have been destroying economic value.

ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates thehistorical volatility of key valuation drivers, including revenue, gross margin, earningsbefore interest, and enterprise free cash flow. The standard deviation of each measure iscalculated and scaled against last year's measure to arrive at a percentage deviation foreach item. These percentage deviations are weighted equally to arrive at thecorresponding fair value range for each stock, measured in percentage terms. The firm'sperformance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH.The ValueRisk™ rating for each firm also determines the fundamental beta of eachfirm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH(1.3).

ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates thetrajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIClast year that was greater than the 3-year average of the measure earn a POSITIVErating. Firms that earned an ROIC last year that was less than the 3-year average of themeasure earn a NEGATIVE rating.

Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ratings. The box is an easy way for investors to quickly assess the business quality ofa company. Firms that generate economic profits with little operating variabilityscore near the top right of the matrix.

Return on Invested Capital. At Valuentum, we place considerable emphasis onreturn on invested capital (both with and without goodwill). The measure focuses onthe return (earnings) the company is generating on its operating assets and is superiorto return on equity and return on assets, which can be skewed by a firm's leverage orexcess cash balance, respectively.

Range of Potential Outcomes. The firm's margin of safety is shown in the graphicof a normal distribution. We consider a firm to be undervalued if its stock price fallsalong the green line and overvalued if the stock price falls along the red line. Weconsider the firm to be fairly valued if its stock price falls along the yellow line.

Money Flow Index (MFI). The MFI is a technical indicator that measures buyingand selling pressure based on both price and volume. Traders typically use thismeasure to identify potential reversals with overbought and oversold levels. We use a14-week measure to rank firms along the following scale: EXTREMELYOVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD(10-20), EXTREMELY OVERSOLD (0-10).

Relative Value. We compare the firm's forward price-to earnings (PE) ratio and itsprice/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below thepeer median, the firm receives an ATTRACTIVE rating. If both are above the peermedian, the firm receives an UNATTRACTIVE rating. Any other combination resultsin a NEUTRAL rating.

Cash Flow Generation. Firms' cash flow generation capacity are measured along thescale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cashflow margin (free cash flow divided by sales) greater than 5% receives a STRONGrating, while firms earning less than 1% of sales as free cash flow receive a WEAKrating.

Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score.

Timeliness Matrix. We compare the company's recent stock performance relative tothe market benchmark with our assessment of its valuation. Firms that areexperiencing near-term stock price outperformance and are undervalued by ourestimate may represent timely buys.

Stock Price Relative Strength. We assess the perfomance of the company's stockduring the past quarter, 13 weeks, relative to an ETF that mirrors the aggregateperformance of constituents of the stock market. Firms are measured along the scaleof STRONG, NEUTRAL, and WEAK. Companies that have outperformed themarket index by more than 2.5% during this 13-week period receive a STRONGrating, while firms that trailed the market index by more than 2.5% during this 13-week period receive a WEAK rating.

Page 15

SWK Rating History Price Fair Value VBI8-Oct-21 $177.28 $177.00 510-Dec-20 $177.64 $176.00 730-Dec-19 $165.44 $132.00 71-Apr-19 $139.30 $134.00 712-Nov-18 $128.84 $130.00 46-Jul-18 $133.14 $133.00 42-Mar-18 $152.56 $133.00 327-Oct-17 $164.71 $129.00 426-Jul-17 $140.30 $118.00 610-Mar-17 $129.19 $113.00 63-Oct-16 $122.27 $103.00 63-Jun-16 $113.34 $95.00 528-Dec-15 $106.99 $93.00 62-Jul-15 $107.71 $94.00 5

The High Yield Dividend Newsletter portfolio, the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the Nelson Exclusive publication, is hypothetical and does not represent actual trading. Past performance is not a guarantee of future results.

Valuentum is an investment research publishing company.

Valuentum has not owned and does not own any shares of stocks mentioned on its website or in this report. President of Investment Research Brian Nelson does not own any shares of stocks mentioned on Valuentum's website or in this report. Majority share owner of Valuentum, Elizabeth Nelson, currently has exposure to HON in her retirement account.

If an independent contributor or employee mentions a stock he or she owns, we disclose it in the article/report that mentions the security. Please view individual articles on Valuentum's website for additional disclosures. Contact us to learn more about Valuentum's editorial policies.

To send us feedback or if you have any questions, please contact us at [email protected]. We're always looking for ways to better serve your investment needs and improve our research.

Disclosures, Disclaimers & Additional Sources

Copyright (c) 2017 by Valuentum, Inc. All rights reserved.No part of this publication may be reproduced in any form or by any means.The information contained in this report is not represented or warranted to be accurate, correct,complete, or timely. This report is for informational purposes only and should not be considered asolicitation to buy or sell any security. No warranty or guarantee may be created or extended bysales or promotional materials, whether by email or in any other format. The securities or strategiesmentioned herein may not be suitable for all types of investors. The information contained in thisreport does not constitute any advice, especially on the tax consequences of making any particularinvestment decision. This material is not intended for any specific type of investor and does nottake into account an investor's particular investment objectives, financial situation or needs. Thisreport is not intended as a recommendation of the security highlighted or any particular investmentstrategy. Before acting on any information found in this report, readers should consider whethersuch an investment is suitable for their particular circumstances, perform their own due-diligence,and if necessary, seek professional advice. The sources of the data used in this report are believed by Valuentum to be reliable, but the data’saccuracy, completeness or interpretation cannot be guaranteed. Assumptions, opinions, andestimates are based on our judgment as of the date of the report and are subject to change withoutnotice. Valuentum is not responsible for any errors or omissions or for results obtained from the useof this report and accepts no liability for how readers may choose to utilize the content. In no eventshall Valuentum be liable to any party for any direct, indirect, incidental, exemplary, compensatory,punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, withoutlimitation, lost income or lost profits and opportunity costs) in connection with any use of theinformation contained in this document. Investors should consider this report as only a single factorin making their investment decision. Valuentum is not a money manager, is not a registered investment advisor, and does not offerbrokerage or investment banking services. Valuentum has not received any compensation from thecompany or companies highlighted in this report. Valuentum, its employees, independentcontractors and affiliates may have long, short or derivative positions in the securities mentionedherein. Information and data in Valuentum’s valuation models and analysis may not capture allsubjective, qualitative influences such as changes in management, business and political trends, orlegal and regulatory developments. Redistribution is prohibited without written permission. Readersshould be aware that information in this work may have changed between when this work waswritten or created and when it is read. There is risk of substantial loss associated with investing infinancial instruments. Valuentum's company-specific forecasts used in its discounted cash flow model are rules-based.These rules reflect the experience and opinions of Valuentum's analyst team. Historical data used inour valuation model is provided by Xignite and from other publicly available sources includingannual and quarterly regulatory filings. Stock price and volume data is provided by Xignite. Nowarranty is made regarding the accuracy of any data or any opinions. Valuentum's valuation modelis based on sound academic principles, and other forecasts in the model such as inflation and theequity risk premium are based on long-term averages. The Valuentum proprietary automated text-generation system creates text that will vary by company and may often change for the samecompany upon subsequent updates. Valuentum uses its own proprietary stock investment style and industry classification systems. Peercompanies are selected based on the opinions of the Valuentum analyst team. Research reports anddata are updated periodically, though Valuentum assumes no obligation to update its reports,opinions, or data following publication in any form or format. Performance assessment ofValuentum metrics, including the Valuentum Buying Index, is ongoing, and we intend to updateinvestors periodically, though Valuentum assumes no obligation to do so. Not all information isavailable on all companies. There may be a lag before reports and data are updated for stock splitsand stock dividends. Past simulated performance, whether backtested or walk-forward or other, is not a guarantee offuture results. For general information about Valuentum's products and services, please contact usat [email protected] or visit our website at www.valuentum.com.

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Stanley Black & Decker SWK FAIRLY VALUED Buying Index™ 5