This analysis will review one of America’s largest and oldest organizations. Black & Decker Corporation (BDK) has had numerous acquisitions and mergers that have allowed it to become the organization as we know it today. Given past performance and growth excellence, it appears almost a certainty that BDK should be in an individual’s portfolio.
With the information age upon us, we have increasingly more ways in which to analyze a company and its financial statements. We will take a closer look at Black & Decker’s financials over the last 3 years and calculate if the future or present statistics are as profitable as BDK and history would have you believe.
In our analysis, we will look to make a recommendation to a potential investor who is interested in purchasing this stock and adding it to his/her portfolio.
Included in the data for our analysis will look at the balance sheets and income statements over the 2003-2005 timeframe. We will also consider financial criteria that include ratios, historical stock prices and future projections.
Is this investment sound? Is the organization sound? These are some of the questions that should be thought through when reading this analysis and managing our perspective.
It is important to consider that with all the information, for all the research, past performance is no guarantee for future performance.
History of Organization
Two young entrepreneurs Duncan Black, and Alonzo Decker founded a small machine shop in Baltimore, Maryland. This shop was created in the early 1900’s and has withstood the test of time. Today this company known as Black and Decker Ltd (BDK) is still going strong. It has had a long and eventful history, but on all accounts it is a larger entity. A global manufacturer of numerous product lines lead market share in their respective industries. It is now the world’s largest producer of power tools and accessories.
BDK was not always the global leader in tool and accessories, and was not until the late 20th century, almost 100 years later that it became a household name. BDK began as simply two men in a garage working on the production of innovative products. Trying to help men perform daily tasks around the house; and to help builders and contractors alike. It received its first patent in 1917 for a pistol grip and trigger switch on its drill, its first product. This began a cascade of events that created the modern day Black and Decker.
After receiving the patent, business expanded, and Duncan and Alonzo were able to build their first manufacturing plant in Baltimore Maryland. This facility was anything but modern, but was 12,000 square feet of potential. Over the next 5 years production and sales increased. In 1922 the company formed its first foreign subsidiary in Canada, and with it, its first wholly owned foreign assembly operations and sales. By 1925 international expansion continued, with the UK subsidiary.
In 1928, the acquisitions began with the purchase of Van Dorn Electric Tool Company of Cleveland, Ohio. This allowed BDK to enter the industrial power tools market. After this several additional acquisitions and subsidiary formations continued, until 1941 when war broke out. BDK converted most of its operations to manufacture gun shells, and other ordinance for the Allie effort. Power tools had become a secondary production focus due to legislative constraints.
After the war, BDK returned to its growing ways, and in 1950 produced its one millionth home utility power drill. Soon after, Duncan Black died leaving Alonzo Decker to take the helm as president. In his absence, they opened a 121,000 square foot plant in Hampstead, MD. This cemented their presence in the Baltimore region. Soon, thereafter Alonzo passed away.
BDK continued to produce and thrive while maintaining the company a family run organization. In the 70’s sales grew to $500 million a year. Global dominance in...