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Value

Snap-on Inc. (SNA - Analyst Report) did it again, recently beating the Zacks Consensus Estimate for the 7th consecutive time. This Zacks #1 Rank (strong buy) continues to be a value stock, with a forward P/E of 14.1.

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 Beat By 7.6% in the Second Quarter

On July 21, Snap-on reported its second quarter results and did not disappoint. It surprised on the Zacks Consensus by 8 cents a share.

Earnings were $1.14 compared to the consensus of $1.06. This was a gain of 46.2% over the 78 cents per share it made in the second quarter of 2010.

Sales jumped 12.2% to $726.7 million compared to the year ago quarter. Even excluding favorable foreign currency translation, organic sales were still up 7.2%.

The Tools Group segment was the best performer, as sales rose 13% to $299 million, with organic sales also jumping 10%.

The Repair Systems & Information Group segment saw sales of $234.5 million in the quarter, a gain of 13.9% from last year due to higher sales to repair shop owners and managers.

2011 Zacks Consensus Estimates Jump

Snap-on didn't provide any EPS guidance for the year. But analysts liked what they heard about the second quarter.

The 2011 Zacks Consensus Estimate climbed to $4.29 from $4.20 per share.

That is earnings growth of 37.1% as the company made just $3.13 per share in 2010.

Shares Still Near a Multi-Year High

Shares have had quite the run-up off the March 2009 lows. In June, they traded at 5 year highs but have since pulled back a bit.

Shares aren't expensive, even at these levels.

In addition to a P/E under 15, which is the cut-off I use for value stocks, Snap-on has a price-to-book ratio of 2.2. A P/B under 3.0 is usually considered a "value" stock.

Snap-on also continues to reward its shareholders by paying a dividend that currently yields 2.1%.

Snap-on has consistently been achieving double digit sales growth the last few quarters as the global economy recovers. It's a way to get value in the growing automobile industry.

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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