Tool maker Black & Decker Corp doubled its profit estimate for the third quarter, citing better-than-expected shipments buoyed by a rebound in the U.S. housing market, sending its shares up 10 percent.
The company, known for its Dewalt power tools, expects to gain as new residential construction picks up in the United States.
In a sign of thawing housing markets, applications to buy a home, a tentative early indicator of sales, climbed to the highest last week since early January in the United States.
We believe that Black & Decker presents a good combination of exposure to residential new construction, which should become a tailwind again in 2010, Barclays Capital analyst Megan McGrath said in a research note to clients.
For the quarter ending Sept 30, the company, which also makes home improvement products, now expects earnings of 91 cents a share, up from its prior forecast of 35 cents to 45 cents a share.
A lower tax rate, due to favorable adjustments, is expected to add 14 cents a share to quarterly profit, the company said in a statement.
The company expects sales to decline 23 percent, better than a 24 percent drop it forecast in July.
Sales were modestly better than we had anticipated, due largely to earlier-than-expected shipments during the quarter of promotional items in the U.S. industrial power tools and accessories business, which were previously anticipated to occur in the fourth quarter, Chief Executive Nolan Archibald said.
Analysts on average expected a profit of 45 cents a share, on revenue view of $1.17 billion, according to Thomson Reuters I/B/E/S.
Shares of the company, which have risen more than 40 percent over the last six months, rose 10 percent to $52.21 in morning trade Monday on the New York Stock Exchange.
(Reporting by Biswarup Gooptu in Bangalore; Editing by Ratul Ray Chaudhuri)