Tool supplier Stanley Works (NYSE: SWK) remains optimistic about earnings into 2008, despite deterioration of the U.S. homebuilding market. Even in 4Q2007, when the domestic construction market softened like warm butter, Stanley Works managed to post more than respectable earnings. 4Q sales increased 15% to $1.2 billion. Diluted EPS increased 7% to $1.11, operating margins increased and free cash flow increased 89% from 4Q2006.

4Q2007 was a tough quarter in the U.S., as subprime mortgage losses ran into the billions, banks tightened credit, and construction slowed dramatically. Despite the meltdown in the U.S. market, Stanley posted double-digit sales increases in all its international markets, which helped to offset slower sales in the U.S. The story is the same for FY2007.

Overall, the company is in good shape with net sales up 12% to $4.5 billion, although only 2% of that growth is organic. More than half of the increase was due to acquisitions. FY2007 diluted EPS increased 15% to $4.00, and free cash flow increased by $99 million to $457 million. Despite forecasting an organic growth rate of 0-1%, CEO John Lundgren states that Stanley Works is well positioned to withstand a possible U.S. recession.

Improv Everywhere led 225 pranksters in a slow motion and stationary mock shop at a Home Depot in New York City. Rick Munarriz of the Motley Fool, suggests the shop stoppage was meant to call attention to the slow motion of Home Depot's recent financial peformance and continued fall out from CEO Nardelli's ubermensch behavior at the annual meeting in May. In its second quarter earnings report in early August, Home Depot suggested to shareholders that the second half of 2006 would not contain upbeat financial news. And this was before a couple thousand news stories about the real estate slowdown in many parts of the country. Investors who are curious to see what several hundred people look like doing nothing in a Home Depot aisle can view a video of the prank on YouTube. Apparently, more than 325,000 people with waaaaaay too much time on their hands have done exactly that.

But video may play a more important role in Home Depot's strategic plan in the near future.