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Snap-on (SNA) Expands Repair Solutions by Dealer-FX Buyout

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In a bid to expand its capabilities in the Repair Information and Software Solutions space, Snap-on Inc. SNA recently acquired Dealer-FX in a deal worth roughly $200 million in cash. Based in Ontario, Dealer-FX offers digital solutions that lead to higher dealership productivity with an improved vehicle service experience. Given the increasing complexity of vehicle repair, this buyout is expected to aid Snap-on’s growth through its end-to-end dealership software solutions.

From now-on, Dealer-FX will be reported as part of the Repair Systems & Information (RS&I) segment. Management noted that Dealer-FX, which boasts fiscal 2020 revenues of nearly $37 million, is likely to have no significant impact on Snap-on’s bottom line in 2021.

This move will support Snap-on’s RS&I segment by expanding the OEM and dealership business. The segment already offers electronic parts, essential equipment and diagnostics programs as well as custom analytics to OEMs and more than 50,000 dealerships globally. Notably, sales in this segment grew 7.8% year over year during fourth-quarter 2020, driven by higher sales in OEM dealerships as well as strength in diagnostics and repair information products to independent repair shop owners and managers.

In fact, all of the company’s segments performed well in the aforementioned quarter leading to organic sales growth of 10.6% year over year. Also, both top and bottom lines beat the Zacks Consensus Estimate, marking the second straight quarter of an earnings beat and the third consecutive quarter of a sales surprise. Also, earnings and sales improved year over year. Apart from these, it remains on track with its Value Creation model.

The company is also progressing well with its Rapid Continuous Improvement (RCI) plan, which is aimed at enhancing organizational effectiveness and minimizing costs in a bid to boost sales and margins and generate savings. Savings from the RCI initiative reflect gains from the continuous productivity and process improvement plans. Going ahead, Snap-on intends to boost customer services along with enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments.

In the past three months, shares of this Zacks Rank #2 (Buy) company have rallied 20.7%, outperforming the industry’s growth of 14.3%.

Other Stocks to Consider

Crocs CROX, a Zacks Rank #1 (Strong Buy) stock, has an impressive long-term earnings growth rate of 21.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corp. DECK has a long-term earnings growth rate of 21.5% and a Zacks Rank #2.

PVH Corp. PVH, a Zacks Rank #2 stock, has an impressive long-term earnings growth rate of 18%.

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SnapOn Incorporated (SNA) : Free Stock Analysis Report

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Crocs, Inc. (CROX) : Free Stock Analysis Report

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