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Snap-on (SNA) Shares Rise as Q3 Earnings & Sales Top Estimates
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Snap-on Inc. (SNA - Free Report) has posted better-than-expected top and bottom lines in third-quarter 2022. Moreover, sales and earnings advanced year over year. Results have gained from a continued positive business momentum and contributions from its Value Creation plan despite the ongoing pandemic-related disruptions, inflationary pressures and supply-chain challenges.
Management remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives.
Shares of the company gained 1.5% following the strong third-quarter results. Shares of the Zacks Rank #4 (Sell) company have gained 0.9% in the past three months compared with the industry's 7.1% rally.
Image Source: Zacks Investment Research
Q3 Highlights
Snap-on’s earnings of $4.14 per share in third-quarter 2022 surpassed the Zacks Consensus Estimate of $3.76 and improved 16% from earnings of $3.57 reported in the prior-year quarter.
Net sales grew 6.2% to $1,102.5 million and beat the Zacks Consensus Estimate of $1,070 million. The increase can be attributed to organic sales growth of 10.4%. This was somewhat offset by $39.1 million of negative impacts of foreign-currency translations.
The gross profit of $532.6 million improved 2.3% year over year, while the gross margin contracted 190 basis points (bps) year over year to 48.3% in the reported quarter.
The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Financial Services' operating earnings were $87.3 million in the quarter, which was flat year over year.
Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
SnapOn Incorporated Price, Consensus and EPS Surprise
Sales in Commercial & Industrial Group rose 1.5% from the prior-year quarter to $356.8 million, driven by organic sales growth of 7.9%. This was partly offset by a negative currency impact of $20.8 million. Organic growth was aided by higher sales in the segment’s Asia Pacific operations and specialty tools business. Organic sales also benefited from sales growth in critical industries.
The Tools Group segment’s sales rose 5.3% year over year to $496.6 million, driven by organic sales growth of 7.4%, offset by an $8.9-million negative impact of foreign currency. Robust sales in the U.S. franchise business aided organic sales, while declines in international operations have partly negated the results.
Sales in Repair Systems & Information Group advanced 13.6% year over year to $414 million, with organic sales growth of 17.2%. Sales gains were somewhat offset by an $11.2-million negative impact from foreign currency. Strong sales of diagnostics and repair information products to independent repair shop owners and managers, and a rise in sales of under-car equipment contributed to segment organic sales growth. Increased activities with OEM dealerships also aided the segment’s results.
The Financial Services business’ reported revenues dropped 23.9% year over year to $66.4 million in the quarter.
Financials
As of Oct 1, 2022, Snap-on’s cash and cash equivalents totaled $759.3 million, with long-term debt of $1,183.6 million and shareholders’ equity (before non-controlling interest) of $4,317.2 million. It incurred $61.5 million of capital expenditure as of Oct 1, 2022.
Looking Ahead
Though Snap-on has shown resilience, management expects the impacts of threats of new COVID-19 variants and supply-chain headwinds to persist throughout 2022. The company is progressing well with its growth efforts, focused on expanding its professional customer base, particularly in the automotive repair and critical industries. As a result, the capital expenditure for 2022 is projected to be $90-$100 million. It expects an effective tax rate of 23-24% for 2022.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are Crocs Inc. (CROX - Free Report) , lululemon athletica (LULU - Free Report) and Toro (TTC - Free Report) .
Crocs currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 21.9% on average. The company has an expected long-term earnings growth rate of 15%. The CROX stock has rallied 20.7% in the past three months.
The Zacks Consensus Estimate for Crocs’ current financial year’s sales and earnings per share suggests growth of 49.7% and 20.7%, respectively, from the year-ago period's reported numbers.
lululemon presently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 10.4%, on average. Shares of LULU have declined 3.4% in the past three months. The company has an expected long-term earnings growth rate of 20%.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Toro currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 1.4%, on average. Shares of TTC have gained 12% in the past three months.
The Zacks Consensus Estimate for Toro’s current financial year’s sales and earnings suggests growth of 14.4% and 16%, respectively, from the year-ago period's reported numbers.
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Snap-on (SNA) Shares Rise as Q3 Earnings & Sales Top Estimates
Snap-on Inc. (SNA - Free Report) has posted better-than-expected top and bottom lines in third-quarter 2022. Moreover, sales and earnings advanced year over year. Results have gained from a continued positive business momentum and contributions from its Value Creation plan despite the ongoing pandemic-related disruptions, inflationary pressures and supply-chain challenges.
Management remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives.
Shares of the company gained 1.5% following the strong third-quarter results. Shares of the Zacks Rank #4 (Sell) company have gained 0.9% in the past three months compared with the industry's 7.1% rally.
Image Source: Zacks Investment Research
Q3 Highlights
Snap-on’s earnings of $4.14 per share in third-quarter 2022 surpassed the Zacks Consensus Estimate of $3.76 and improved 16% from earnings of $3.57 reported in the prior-year quarter.
Net sales grew 6.2% to $1,102.5 million and beat the Zacks Consensus Estimate of $1,070 million. The increase can be attributed to organic sales growth of 10.4%. This was somewhat offset by $39.1 million of negative impacts of foreign-currency translations.
The gross profit of $532.6 million improved 2.3% year over year, while the gross margin contracted 190 basis points (bps) year over year to 48.3% in the reported quarter.
The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Financial Services' operating earnings were $87.3 million in the quarter, which was flat year over year.
Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
SnapOn Incorporated Price, Consensus and EPS Surprise
SnapOn Incorporated price-consensus-eps-surprise-chart | SnapOn Incorporated Quote
Segmental Details
Sales in Commercial & Industrial Group rose 1.5% from the prior-year quarter to $356.8 million, driven by organic sales growth of 7.9%. This was partly offset by a negative currency impact of $20.8 million. Organic growth was aided by higher sales in the segment’s Asia Pacific operations and specialty tools business. Organic sales also benefited from sales growth in critical industries.
The Tools Group segment’s sales rose 5.3% year over year to $496.6 million, driven by organic sales growth of 7.4%, offset by an $8.9-million negative impact of foreign currency. Robust sales in the U.S. franchise business aided organic sales, while declines in international operations have partly negated the results.
Sales in Repair Systems & Information Group advanced 13.6% year over year to $414 million, with organic sales growth of 17.2%. Sales gains were somewhat offset by an $11.2-million negative impact from foreign currency. Strong sales of diagnostics and repair information products to independent repair shop owners and managers, and a rise in sales of under-car equipment contributed to segment organic sales growth. Increased activities with OEM dealerships also aided the segment’s results.
The Financial Services business’ reported revenues dropped 23.9% year over year to $66.4 million in the quarter.
Financials
As of Oct 1, 2022, Snap-on’s cash and cash equivalents totaled $759.3 million, with long-term debt of $1,183.6 million and shareholders’ equity (before non-controlling interest) of $4,317.2 million. It incurred $61.5 million of capital expenditure as of Oct 1, 2022.
Looking Ahead
Though Snap-on has shown resilience, management expects the impacts of threats of new COVID-19 variants and supply-chain headwinds to persist throughout 2022. The company is progressing well with its growth efforts, focused on expanding its professional customer base, particularly in the automotive repair and critical industries. As a result, the capital expenditure for 2022 is projected to be $90-$100 million. It expects an effective tax rate of 23-24% for 2022.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are Crocs Inc. (CROX - Free Report) , lululemon athletica (LULU - Free Report) and Toro (TTC - Free Report) .
Crocs currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 21.9% on average. The company has an expected long-term earnings growth rate of 15%. The CROX stock has rallied 20.7% in the past three months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crocs’ current financial year’s sales and earnings per share suggests growth of 49.7% and 20.7%, respectively, from the year-ago period's reported numbers.
lululemon presently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 10.4%, on average. Shares of LULU have declined 3.4% in the past three months. The company has an expected long-term earnings growth rate of 20%.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Toro currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 1.4%, on average. Shares of TTC have gained 12% in the past three months.
The Zacks Consensus Estimate for Toro’s current financial year’s sales and earnings suggests growth of 14.4% and 16%, respectively, from the year-ago period's reported numbers.