Snap-on (SNA) Rallies 15% in 1H23, How Will It Fare Ahead?
Snap-on Corporation’s SNA robust prospects, including organic sales growth and continued positive business momentum, make it worth adding to one’s portfolio. Moreover, management has been on track with its Value Creation model.
Shares of this Zacks Rank #2 (Buy) company have gained 15% in the past six months compared with the industry’s growth of 0.8% and the Consumer Discretionary sector’s rise of 1.1%.
Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The Zacks Consensus Estimate for SNA’s current financial-year sales and earnings suggests growth of 4.7% and 6%, respectively, from the year-ago reported numbers. SNA has a decent history of delivering earnings surprises in the last four reported quarters, the average beat being 9.6%.
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Here’s What Makes SNA a Buy Option
Snap-on’s robust business model helps in enhancing value-creation processes, which, in turn, improves safety, quality of service, customer satisfaction and innovation. The company’s growth strategy focuses on three critical areas, namely enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding critical industries in emerging markets.
SNA is dedicated to various strategic principles and processes aimed at creating value in areas like RCI. The RCI process is designed to enhance organizational effectiveness and minimize costs, beside helping Snap-on boost sales and margins, and generate savings. Savings from the RCI initiative reflect gains from the continuous productivity and process improvement plans.
Management intends to boost customer services, along with enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments. Apart from this, Snap-on’s ability to innovate bodes well. The company has also been investing in new products and increasing brand awareness across the world.
The company is comfortably funding shareholder cash distributions at their current level, and has sufficient financial health and produces plenty of cash to meet its financial obligations. In a recent development, it approved a quarterly dividend of $1.62 per share, payable Jun 9, of shareholders’ record as of May 19.
Snap-on also paid out dividends of $86.1 million and repurchased shares worth $87.2 million under its existing share repurchase programs. As of Apr 1, 2023, the company had $345.4 million remaining under its existing authorizations.
Wrapping Up
Although the ongoing macroeconomic headwinds are likely to persist in 2023, there are plenty of reasons to be bullish about SNA’s fundamentals. Its forward price-to-earnings ratio of 15.7 has underperformed the industry’s ratio of 21.2, which raises optimism in the stock. Topping it, a Value Score of B and a long-term earnings growth rate of 7.9% reflect its inherent strength.
Other Stocks to Consider
Some other top-ranked companies are Bluegreen Vacations BVH, Royal Caribbean RCL and lululemon athletica LULU.
Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy) at present. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BVH’s 2023 sales and EPS indicates increases of 3.6% and 17.6%, respectively, from the year-ago reported levels.
Royal Caribbean sports a Zacks Rank #1 at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 47.9% and 158.3%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 16.7% and 18%, respectively, from the year-ago reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Snap-On Incorporated (SNA) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Bluegreen Vacations Holding Corporation (BVH) : Free Stock Analysis Report
