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Value

Business is good for Snap-on Inc. (SNA - Analyst Report). Sales recently rose 11.6% in the first quarter continuing a multi-quarter streak of sales growth. Despite shares busting out to new 3-year highs, this Zacks #1 Rank (strong buy) is still a value stock.

Snap-on is in the hot auto industry. The company manufactures tools, equipment, diagnostics, and repair information and systems for vehicle dealerships and repair centers.

Founded in 1920 in Wisconsin, the company now has a presence in 150 countries and estimates that it reaches 40% of the world's vehicle technicians.

Snap-on Beats Again

On Apr 21, Snap-on reported first quarter results and surprised on the Zacks Consensus by 7.9%. Earnings per share were 96 cents compared to the 89 cent consensus.

The company has turned it around since the recession, beating 6 straight quarters, including the last 4 by an average of 10%.

Sales jumped to $693.7 million from $621.6 million in the year ago quarter. Even if you exclude favorable foreign currency translation, organic growth was still 10%.

The company saw sales growth in its 3 main segments. Commercial & Industrial Group sales rose 10.3% due to higher sales in the emerging markets and in European-based hand tools.

But it wasn't all the emerging markets. The Snap-on Tools Group segment grew sales by 13.5% due to higher sales in the United States.

The Repair Systems & Information Group segment also saw sales climb 12.3% on strong sales of undercar equipment and increased essential tool and facilitation program sales.

Opportunities in the Emerging Markets

The company expects further expansion in the emerging markets in 2011.

The analysts are bullish on the strategy as 2 estimates have been revised higher in the last week on 2011.

The Zacks Consensus Estimate for 2011 jumped to $4.20 from $4.05 after the earnings results. That is earnings growth of 34.2%.

Snap-on Is Still a Value Stock

Shares have been hot in recent months. The recent earnings surprise pushed them to 3-year highs.

But even with a hot share price, the company still has attractive valuations.

It has a forward P/E ratio of 14.7, which is under the value cutoff I use of 15.

Its price-to-book ratio of just 2.4 is also under the value cutoff of 3.0.

The company also has a solid 1-year return on equity (ROE) of 14.9%.

Additionally, shareholders are rewarded with a dividend yielding 2.1%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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