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Snap-On (SNA) to Report Q4 Earnings: A Beat in the Cards?
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Snap-on Incorporated (SNA - Free Report) is scheduled to report fourth-quarter 2016 results, before the opening bell on Feb 2.
Snap-on has an outstanding earnings surprise history — it has not missed estimates in seven years. Last quarter, it registered a positive earnings surprise of 3.3% and has an average positive surprise of 4.1% for the trailing four quarters.
Let's see how things are shaping up for this announcement and whether Snap-on is set to add yet another earnings beat to its long-standing winning streak.
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 improvement process, designed to improve organizational efficiency and slash costs, including working capital requirements, has helped Snap-on improve sales, margins and savings over the past few quarters.
Snap-on’s successful earnings streak reflects its consistent capability to leverage on market opportunities for augmenting growth. The company continues to make significant efforts toward improving its operating efficiency through the Snap-on Value Creation Processes. For instance, during fourth-quarter 2016, Snap-on’s value creation process contributed to the 2.6% organic sales growth, optical operating margin of 18.9% and a 12.1% increase in earnings per share.
Snap-On’s broad product line adds to its strength. Encouragingly, the company has been witnessing encouraging prospects in most of its business lines that signal brighter day, going forward.Additionally, Snap-on’s financial services portfolio has been recording steady growth over the past few years.
In order to further boost growth, the company entered into a definitive agreement to purchase the Sweden-based firm – Car-O-Liner – for $155 million during the quarter under review. Snap-On believes that this buyout will strengthen its Repair Systems & Information Group position, thus allowing it to fortify its footprint in the auto and in the heavy-duty markets. Moving ahead, Snap-On expects this company will generate operating income margin, comparable to the RS&I undercar equipment business.
Additionally, Tools Group and Repair Systems & Information segments are anticipated to act as major profit churners on the back of positive industry trends. While factors like rising penetration in emerging markets, and constant software and hardware upgrades have been fuelling Tools Group’s growth; Repair Systems is gaining from business deals with independent repair shop owners and managers. Further, Snap-On’s flourishing financial services portfolio will likely act as a catalyst for the quarter to be reported.
Quarter to date, Snap-on’s shares have recorded an average return of 5.9%, marginally outperforming the Zacks classified Tools – Handheld industry average return of 5.7%.
Though Snap-On’s bottom-line performance remained unaffected amid macroeconomic woes, the company is faced with multiple issues that may hurt its fourth-quarter results. The ongoing softness in industrial markets has significantly affected client spending, marring the company’s prospects. Also, sluggish oil and gas market activities are likely to affect the company’s top line in the quarter to be reported.
Moreover, foreign currency fluctuations pose a major concern as one-third of the company’s revenues are derived from its European businesses. Unfavorable foreign currency translations have reduced the company’s fourth-quarter sales by about $9.7 million. Due to foreign currency woes, Commercial & Industrial Group sales declined by $3.5 million, Tools Group sales decreased by $4.6 million and Repair Systems & Information segment recorded $2.8-million sales reduction. We believe that currency fluctuations will remain a risk to the company’s top line in the quarter under review as well.
Snap-On Incorporated Price, Consensus and EPS Surprise
Our proven model does not conclusively show that Snap-on will beat earnings estimates in 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 company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.40.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Snap-on has a Zacks Rank #2 (Buy). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
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:
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
AXIS Capital Holdings Limited (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
See More Zacks Research for These Tickers
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Snap-On (SNA) to Report Q4 Earnings: A Beat in the Cards?
Snap-on Incorporated (SNA - Free Report) is scheduled to report fourth-quarter 2016 results, before the opening bell on Feb 2.
Snap-on has an outstanding earnings surprise history — it has not missed estimates in seven years. Last quarter, it registered a positive earnings surprise of 3.3% and has an average positive surprise of 4.1% for the trailing four quarters.
Let's see how things are shaping up for this announcement and whether Snap-on is set to add yet another earnings beat to its long-standing winning streak.
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 improvement process, designed to improve organizational efficiency and slash costs, including working capital requirements, has helped Snap-on improve sales, margins and savings over the past few quarters.
Snap-on’s successful earnings streak reflects its consistent capability to leverage on market opportunities for augmenting growth. The company continues to make significant efforts toward improving its operating efficiency through the Snap-on Value Creation Processes. For instance, during fourth-quarter 2016, Snap-on’s value creation process contributed to the 2.6% organic sales growth, optical operating margin of 18.9% and a 12.1% increase in earnings per share.
Snap-On’s broad product line adds to its strength. Encouragingly, the company has been witnessing encouraging prospects in most of its business lines that signal brighter day, going forward.Additionally, Snap-on’s financial services portfolio has been recording steady growth over the past few years.
In order to further boost growth, the company entered into a definitive agreement to purchase the Sweden-based firm – Car-O-Liner – for $155 million during the quarter under review. Snap-On believes that this buyout will strengthen its Repair Systems & Information Group position, thus allowing it to fortify its footprint in the auto and in the heavy-duty markets. Moving ahead, Snap-On expects this company will generate operating income margin, comparable to the RS&I undercar equipment business.
Additionally, Tools Group and Repair Systems & Information segments are anticipated to act as major profit churners on the back of positive industry trends. While factors like rising penetration in emerging markets, and constant software and hardware upgrades have been fuelling Tools Group’s growth; Repair Systems is gaining from business deals with independent repair shop owners and managers. Further, Snap-On’s flourishing financial services portfolio will likely act as a catalyst for the quarter to be reported.
Quarter to date, Snap-on’s shares have recorded an average return of 5.9%, marginally outperforming the Zacks classified Tools – Handheld industry average return of 5.7%.
Though Snap-On’s bottom-line performance remained unaffected amid macroeconomic woes, the company is faced with multiple issues that may hurt its fourth-quarter results. The ongoing softness in industrial markets has significantly affected client spending, marring the company’s prospects. Also, sluggish oil and gas market activities are likely to affect the company’s top line in the quarter to be reported.
Moreover, foreign currency fluctuations pose a major concern as one-third of the company’s revenues are derived from its European businesses. Unfavorable foreign currency translations have reduced the company’s fourth-quarter sales by about $9.7 million. Due to foreign currency woes, Commercial & Industrial Group sales declined by $3.5 million, Tools Group sales decreased by $4.6 million and Repair Systems & Information segment recorded $2.8-million sales reduction. We believe that currency fluctuations will remain a risk to the company’s top line in the quarter under review as well.
Snap-On Incorporated Price, Consensus and EPS Surprise
Snap-On Incorporated Price, Consensus and EPS Surprise | Snap-On Incorporated Quote
Earnings Whispers
Our proven model does not conclusively show that Snap-on will beat earnings estimates in 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 company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.40.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Snap-on has a Zacks Rank #2 (Buy). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
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:
American Financial Group, Inc. (AFG - Free Report) , which is expected to report fourth-quarter earnings around Feb 1, has an Earnings ESP of +5.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
AXIS Capital Holdings Limited (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>