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Snap-on Incorporated’s (NYSE:SNA) announced its latest earnings update in December 2018, which indicated that the business gained from a robust tailwind, eventuating to a double-digit earnings growth of 22%. Below, I’ve laid out key growth figures on how market analysts predict Snap-on’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems rather muted, with earnings growing by a single digit 1.3%. The following year doesn’t look much more exciting, though earnings does reach US$794m in 2022.
Even though it’s helpful to understand the growth rate year by year relative to today’s value, it may be more beneficial to gauge the rate at which the business is moving on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Snap-on’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 5.8%. This means that, we can expect Snap-on will grow its earnings by 5.8% every year for the next couple of years.
For Snap-on, I’ve put together three pertinent aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is SNA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SNA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SNA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.