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When Snap-on Incorporated's (NYSE:SNA) announced its latest earnings (30 March 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Snap-on's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not SNA actually performed well. Below is a quick commentary on how I see SNA has performed.
Were SNA's earnings stronger than its past performances and the industry?
SNA's trailing twelve-month earnings (from 30 March 2019) of US$695m has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which SNA is growing has accelerated. What's the driver of this growth? Let's see if it is solely attributable to an industry uplift, or if Snap-on has experienced some company-specific growth.
In terms of returns from investment, Snap-on has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 14% exceeds the US Machinery industry of 7.5%, indicating Snap-on has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Snap-on’s debt level, has declined over the past 3 years from 22% to 21%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Snap-on has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Snap-on to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SNA’s future growth? Take a look at our free research report of analyst consensus for SNA’s outlook.
- Financial Health: Are SNA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 March 2019. This may not be consistent with full year annual report figures.
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 email@example.com. 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. Thank you for reading.