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Can Snap-on (SNA) Maintain the Earnings Streak in Q2?
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Snap-on Incorporated (SNA - Free Report) is scheduled to report second-quarter 2016 results, before the opening bell on Jul 21.
Snap-on has beat earnings estimates over the past five years, which is an extraordinary feat. Last quarter, it registered a positive earnings surprise of 3.8%, with an average surprise of 3.1% over the last four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Snap-on’s overarching business model, which aims to maximize value-creation by focusing on areas like safety, quality of service, customer satisfaction and innovation, has emerged as a tried and tested growth driver. In this regard, The rapid continuous improvement process, which is designed to improve organizational efficiency and lower costs, including working capital requirements, has helped Snap-on improve sales, margins and savings over the past couple of quarters.
For instance, during the first quarter of 2016, Snap-on’s value creation process contributed to the 18.6% improvement in operating margin and 15.5% growth in EPS. The solid focus on internal operational improvement is expected to be a key growth driver for the upcoming second-quarter results. This apart, the strategy of innovation which forms an integral part of the company has largely contributed in the development of new products over time.
During first-quarter 2016, the Repair Systems & Information segment launched touchscreen diagnostic workstation, VERUS Edge and V3300 wheel aligner. The market traction of VERUS Edge and V3300 wheel aligner, along with the three-quarter inch flank drive 12 point impact socket and Snap-on 5S Dual Visual Control Cabinet (launched under Commercial & Industrial Group segment) and Snap-on 312 CF heavy-duty diagonal cutters (launched under the The Tools group) are expected drive top-line growth.
In addition, growing complexities of new vehicles and aging fleet across the globe are fuelling growth at Snap-on’s Repair Systems & Information segment, thereby boosting the top line. In this regard, the company’s deals with independent repair shop owners and managers are likely to drive second-quarter results.
However, on the flip side, the ongoing softness in industrial markets which are impacting client spending may thwart the growth momentum at Snap-on to some extent. Additionally, dwindling aerospace projects in some end-markets of the Middle East are proving to be a matter of concern. In addition, strengthening of the U.S. dollar and other macroeconomic issues has been hurting the company’s sales as one third of its revenues are derived from its European businesses.
Unfavorable foreign currency translations hurt sales at Commercial & Industrial Group by $6.7 million and Repair Systems & Information by $4.5 million during the first quarter of 2016 and may continue to do so for the soon to-be-reported quarter as well. Moreover, stiff competition across its all market segments and fluctuations in commodity prices including steel may play spoilsport.
Our proven model does not conclusively show that Snap-on will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Earnings ESP for the stock currently stands at 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at $2.22.
Zacks Rank: Snap-on’s Zacks Rank #3, when combined with 0.00% ESP, makes surprise predictions difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Casella Waste Systems Inc. (CWST - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #1. The company will report results on Jul 28.
Reliance Steel & Aluminum Co. (RS - Free Report) has an Earnings ESP of +3.05% and a Zacks Rank #2. The company will report results on Jul 21.
Allegion Plc (ALLE - Free Report) has an Earnings ESP of +2.25% and a Zacks Rank #2. The company will report results on Jul 28.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Can Snap-on (SNA) Maintain the Earnings Streak in Q2?
Snap-on Incorporated (SNA - Free Report) is scheduled to report second-quarter 2016 results, before the opening bell on Jul 21.
Snap-on has beat earnings estimates over the past five years, which is an extraordinary feat. Last quarter, it registered a positive earnings surprise of 3.8%, with an average surprise of 3.1% over the last four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Snap-on’s overarching business model, which aims to maximize value-creation by focusing on areas like safety, quality of service, customer satisfaction and innovation, has emerged as a tried and tested growth driver. In this regard, The rapid continuous improvement process, which is designed to improve organizational efficiency and lower costs, including working capital requirements, has helped Snap-on improve sales, margins and savings over the past couple of quarters.
For instance, during the first quarter of 2016, Snap-on’s value creation process contributed to the 18.6% improvement in operating margin and 15.5% growth in EPS. The solid focus on internal operational improvement is expected to be a key growth driver for the upcoming second-quarter results. This apart, the strategy of innovation which forms an integral part of the company has largely contributed in the development of new products over time.
During first-quarter 2016, the Repair Systems & Information segment launched touchscreen diagnostic workstation, VERUS Edge and V3300 wheel aligner. The market traction of VERUS Edge and V3300 wheel aligner, along with the three-quarter inch flank drive 12 point impact socket and Snap-on 5S Dual Visual Control Cabinet (launched under Commercial & Industrial Group segment) and Snap-on 312 CF heavy-duty diagonal cutters (launched under the The Tools group) are expected drive top-line growth.
In addition, growing complexities of new vehicles and aging fleet across the globe are fuelling growth at Snap-on’s Repair Systems & Information segment, thereby boosting the top line. In this regard, the company’s deals with independent repair shop owners and managers are likely to drive second-quarter results.
However, on the flip side, the ongoing softness in industrial markets which are impacting client spending may thwart the growth momentum at Snap-on to some extent. Additionally, dwindling aerospace projects in some end-markets of the Middle East are proving to be a matter of concern. In addition, strengthening of the U.S. dollar and other macroeconomic issues has been hurting the company’s sales as one third of its revenues are derived from its European businesses.
Unfavorable foreign currency translations hurt sales at Commercial & Industrial Group by $6.7 million and Repair Systems & Information by $4.5 million during the first quarter of 2016 and may continue to do so for the soon to-be-reported quarter as well. Moreover, stiff competition across its all market segments and fluctuations in commodity prices including steel may play spoilsport.
SNAP-ON INC Price and EPS Surprise
SNAP-ON INC Price and EPS Surprise | SNAP-ON INC Quote
Earnings Whispers
Our proven model does not conclusively show that Snap-on will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Earnings ESP for the stock currently stands at 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at $2.22.
Zacks Rank: Snap-on’s Zacks Rank #3, when combined with 0.00% ESP, makes surprise predictions difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Casella Waste Systems Inc. (CWST - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #1. The company will report results on Jul 28.
Reliance Steel & Aluminum Co. (RS - Free Report) has an Earnings ESP of +3.05% and a Zacks Rank #2. The company will report results on Jul 21.
Allegion Plc (ALLE - Free Report) has an Earnings ESP of +2.25% and a Zacks Rank #2. The company will report results on Jul 28.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>