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Can Snap-on Inc. (SNA) Surprise this Earnings Season?

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Snap-on Inc. is set to report its first-quarter 2014 results on Apr 17 before the opening bell. The company delivered a positive surprise of 3.23% in the last quarter. Let’s see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

The company continued to benefit from management’s consistent focus on enhancing van network, expanding repair shop owners and managers, extending service to critical industries, strategic acquisitions and expansion in emerging markets.

However, Snap-on’s business suffered due to adverse movement of foreign exchange rates. Also, the Commercial & Industrial Group segment’s military business remained weak for the last couple of quarters.

Earnings Whispers?

Our proven model does not conclusively show that Snap-on is likely to beat estimates this quarter. This is because a stock needs to have both positive Earnings ESP and Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below:

Zacks ESP: Snap-on has a Zacks Earnings ESP of 0.00%

Zacks Rank #3 (Hold): Snap-on’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks  Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

United Rentals, Inc.  with Earnings ESP of 8.57% and a Zacks #2 Rank (Buy)

BankUnited, Inc.  with Earnings ESP of 6.82% and a Zacks Rank #2

Lincoln Electric Holdings Inc.  with Earnings ESP of 1.11% and a Zacks Rank #2

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