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Factors Likely to Influence Snap-on's (SNA) Earnings in Q1

Zacks Equity Research

Snap-on Inc. SNA is scheduled to report first-quarter 2019 results on Apr 18, before the opening bell.

Notably, the company delivered a positive earnings surprise in three of the trailing four quarters, the average beat being 2.2%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.92, reflecting a 4.7% improvement year over year. However, the estimates have been revised downward over the past 30 days. For revenues, the consensus mark stands at $930.7 million, mirroring a 0.5% decline from the year-ago period.

Snap-On Incorporated Price and EPS Surprise

Snap-On Incorporated Price and EPS Surprise | Snap-On Incorporated Quote

What You Should Know Prior to 1Q19

Snap-on has been gaining from its robust business and focus on value-creation processes. Moreover, the company’s efforts toward product innovation bode well, which are significantly contributing to its performance. Currently, its growth strategy focuses on three critical areas namely enhancing the franchise network; improving relationship with repair shop owners and managers; and expanding major industries in emerging markets.

Snap-on’s Rapid Continuous Improvement (RCI) program appears encouraging as well. It is designed to enhance organizational effectiveness, minimize costs and generate savings. Management intends to boost customer services as well as improve manufacturing and supply chain capabilities through the RCI initiatives and further investments. Additionally, the company expects to leverage its capabilities in the automotive repair area beside strengthening its overall professional customer base.

Meanwhile, higher sales owing to gains from acquisitions, broad-based strength in the Commercial & Industrial Group division and increased sales in the U.S. franchise operations are contributing to Snap-on’s bottom-line performance.

However, the company has been witnessing softness across its Tools Group segment over the past few quarters. This, in turn, has been hurting the company’s sales, which lagged estimates for the third straight quarter in fourth-quarter 2018. Lower sales at the company’s International franchise business, including the U.K., has been weighing on the segment. Although management is making constant efforts to revive performance at this division, it is to be seen whether these efforts will benefit the segment.

Furthermore, unfavorable currency fluctuations hurt Snap-on’s top and bottom lines in the fourth quarter. We expect the company’s results to bear impacts of volatile currency environment in the near term.
A Look at Zacks Model

Our proven model does not conclusively show that Snap-on is likely to beat earnings estimates in the first quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Snap-on has a Zacks Rank #3 and an Earnings ESP of -1.31%, which make surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Masonite International Corporation DOOR has an Earnings ESP of +1.37% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wynn Resorts, Limited WYNN has an Earnings ESP of +2.54% and a Zacks Rank of 3.

Whirlpool Corporation WHR has an Earnings ESP of +0.43% and a Zacks Rank #3.

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