We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Snap-On (SNA) Up 3.5% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Snap-On (SNA - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Snap-On due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Snap-on's Q2 Earnings Miss Estimates, Sales Beat
Snap-on posted second-quarter 2020 results, wherein the bottom line lagged the Zacks Consensus Estimate while sales surpassed the same. Further, the top and bottom lines decreased year over year. Results were affected by the tough economic environment and unprecedented COVID-19 impacts. From April to May and June, the company witnessed a declining sales trend.
Q2 in Details
Snap-on’s adjusted earnings of $1.91 per share in second-quarter 2020 missed the Zacks Consensus Estimate of $1.94. Moreover, the figure was down 40.7% from the year-ago quarter’s adjusted earnings of $3.22 per share.
Net sales declined 23.9% to $724.3 million but beat the Zacks Consensus Estimate of $708 million. The downside can be attributed to soft organic sales to the tune of 22.9% and a $14.4-million adverse impact from foreign currency translations. However, the growth was offset by $2.3 million in contributions from acquisitions.
Further, the company’s adjusted operating earnings before financial services totaled $95.1 million, down 49.9% year over year.
Adjusted operating earnings of $152.7 million were down 39% from the prior-year quarter. Additionally, adjusted operating earnings margin contracted significantly to 18.9% in the quarter under review.
Segmental Details
Sales at Commercial & Industrial Group fell 21.8% from the prior-year quarter to $261.9 million due to an organic sales decline of 20.2% and currency headwinds of $6.9 million. This was somewhat offset by $0.7-million gains from acquisitions. Sales decline in critical industries and the power tools operation to the tune of mid-teens hurt the segment.
The Tools Group segment’s sales fell 20.3% year over year to $323.3 million due to a 19.7% decline in organic sales and a $3.3-million impact of currency headwinds. Organic sales were hurt as sales in the United States fell by mid-teens and in international franchise operations by 40%.
Sales at Repair Systems & Information Group declined 29.8% year over year to $245 million. Moreover, organic sales at the segment dropped 29.5% from the year-ago quarter due to lower sales to OEM dealerships and softness in undercar equipment to the tune of more than 30% along with sales decline of mid-teen digit in diagnostics and repair information products to independent repair shop owners and managers. Further, unfavorable currency rates hurt the top line to the tune of $4.8 million. However, sales of $2.3 million from buyouts aided growth.
Nevertheless, the Financial Services business reported revenues of $57.6 million, down from $84.6 million in the year-ago quarter.
Financials
During the quarter, Snap-on’s cash and cash equivalents totaled $686.2 million compared with $184.5 million as of Dec 28, 2019.
Looking Ahead
Given the tough retail environment stemming from the ongoing COVID-19 outbreak, Snap-on has witnessed improving trends in the second quarter, which is likely to continue in the near term. Further, the company is increasing focus on its Rapid Continuous Improvement (RCI) plan and other cost-cutting efforts in a bid to stay afloat amid this crisis. Owing to this, it incurred expenses of $4 million in the second quarter. Apart from these, capital expenditure is estimated to be $75-$85 million for 2020. Out of this, $29 million has been incurred in the first half of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Snap-On has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Snap-On has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Snap-On (SNA) Up 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Snap-On (SNA - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Snap-On due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Snap-on's Q2 Earnings Miss Estimates, Sales Beat
Snap-on posted second-quarter 2020 results, wherein the bottom line lagged the Zacks Consensus Estimate while sales surpassed the same. Further, the top and bottom lines decreased year over year. Results were affected by the tough economic environment and unprecedented COVID-19 impacts. From April to May and June, the company witnessed a declining sales trend.
Q2 in Details
Snap-on’s adjusted earnings of $1.91 per share in second-quarter 2020 missed the Zacks Consensus Estimate of $1.94. Moreover, the figure was down 40.7% from the year-ago quarter’s adjusted earnings of $3.22 per share.
Net sales declined 23.9% to $724.3 million but beat the Zacks Consensus Estimate of $708 million. The downside can be attributed to soft organic sales to the tune of 22.9% and a $14.4-million adverse impact from foreign currency translations. However, the growth was offset by $2.3 million in contributions from acquisitions.
Further, the company’s adjusted operating earnings before financial services totaled $95.1 million, down 49.9% year over year.
Adjusted operating earnings of $152.7 million were down 39% from the prior-year quarter. Additionally, adjusted operating earnings margin contracted significantly to 18.9% in the quarter under review.
Segmental Details
Sales at Commercial & Industrial Group fell 21.8% from the prior-year quarter to $261.9 million due to an organic sales decline of 20.2% and currency headwinds of $6.9 million. This was somewhat offset by $0.7-million gains from acquisitions. Sales decline in critical industries and the power tools operation to the tune of mid-teens hurt the segment.
The Tools Group segment’s sales fell 20.3% year over year to $323.3 million due to a 19.7% decline in organic sales and a $3.3-million impact of currency headwinds. Organic sales were hurt as sales in the United States fell by mid-teens and in international franchise operations by 40%.
Sales at Repair Systems & Information Group declined 29.8% year over year to $245 million. Moreover, organic sales at the segment dropped 29.5% from the year-ago quarter due to lower sales to OEM dealerships and softness in undercar equipment to the tune of more than 30% along with sales decline of mid-teen digit in diagnostics and repair information products to independent repair shop owners and managers. Further, unfavorable currency rates hurt the top line to the tune of $4.8 million. However, sales of $2.3 million from buyouts aided growth.
Nevertheless, the Financial Services business reported revenues of $57.6 million, down from $84.6 million in the year-ago quarter.
Financials
During the quarter, Snap-on’s cash and cash equivalents totaled $686.2 million compared with $184.5 million as of Dec 28, 2019.
Looking Ahead
Given the tough retail environment stemming from the ongoing COVID-19 outbreak, Snap-on has witnessed improving trends in the second quarter, which is likely to continue in the near term. Further, the company is increasing focus on its Rapid Continuous Improvement (RCI) plan and other cost-cutting efforts in a bid to stay afloat amid this crisis. Owing to this, it incurred expenses of $4 million in the second quarter. Apart from these, capital expenditure is estimated to be $75-$85 million for 2020. Out of this, $29 million has been incurred in the first half of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Snap-On has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Snap-On has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.