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Shares of Snap-on Inc. (SNA - Analyst Report) reached a 52-week high of $107.93 on Friday, Dec 20, 2013. However, the stock closed at $106.89, representing a one-year return of about 36.0% and a healthy year-to-date return of about 32.2%. Average volume of shares traded over the last three months stands at approximately 250,403.

The company witnessed growth across three of its four businesses during the quarter. Planned strategic investments to strengthen its mobile tool distribution network, proliferation in the vehicle repair garage and expansion of critical industries were important growth drivers. Expansion in the emerging markets also contributed to strong performance in the quarter. The company remains focused on more such strategic investments moving ahead.

Snap-on delivered positive earnings surprises in the last four quarters with an average beat of 4.32%. This Zacks Rank #3 (Hold) company has a market cap of $6.2 billion and a long-term expected earnings growth rate of 9.5%.

Snap-on’s Strengths

Snap-on has been strengthening its business model by pursuing geographic and customer diversification and also expanding its presence in emerging markets and critical industries. This apart, the company persists in strategic investments with the aim of enhancing franchisee network, expanding the vehicle repair garage, extending in critical industries and penetrating emerging markets.

The company works under the Rapid Continuous Improvement (RCI) process, which is designed to improve organizational effectiveness and lower costs, including working capital requirements. It has also helped improve sales, margins and savings for the company. As a result, asset utilization has developed by rationalizing production through plant closures, and working capital has been used more effectively. Part of the RCI process is the transformation of Snap-On’s global manufacturing and supply chain into a market-demand-based, lower-cost replenishment system.

The biggest advantage of Snap-on is its ability to innovate which it has been doing so over the last 90 years. Snap-On has invested in new products and increased brand awareness. The company managed to create product excitement and real customer value through a combination of innovation and customer connection processes. These processes, when combined with RCI, enable progress. Snap-On’s Wisconsin lab, which is called Innovation Works, combines both innovation and customer connection.

Improved Q313 Earnings

Snap-on Inc. reported stellar third-quarter 2013 results with a healthy growth in net sales and earnings. Net income for the quarter increased to $84.6 million or $1.43 per share from $74.1 million or $1.26 in the year-earlier quarter. The reported earnings also beat the Zacks Consensus Estimate by 3 cents.

Despite continued macroeconomic headwinds, the company is favorably benefited by the management’s focus on enhancing van network, growing business from repair shop owners and managers, extending service to critical industries, strategic acquisitions and expansion in emerging markets.

Net sales of the company were up 5.8% year over year to $753.2 million. Total revenue in the reported quarter increased to $798.3 million from $752.1 million in the year-ago quarter. Excluding inorganic revenues of $15.6 million from the May 2013 acquisition of Challenger Lifts, Inc. and adverse foreign currency translation effects, organic sales climbed 4.7% year over year.

Estimate Revisions

Over the last 60 days, the estimates for 2013 and 2014 witnessed upward movement, with estimate for fiscal 2013 up 0.34% to $5.89 and fiscal 2014 estimates increased 0.8% to $6.48.

Other Stocks to Consider

Snap-on currently has a Zacks Rank #3 (Hold). Investors interested in the machinery and general industries sector can consider Xylem Inc. (XYL - Analyst Report), DXP Enterprises, Inc. (DXPE - Snapshot Report) and Graham Corp. (GHM - Snapshot Report). Xylem carries a Zacks Rank #1 (Strong Buy) while DXP Enterprises and Graham have a Zacks Rank #2 (Buy).

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