Snap-on Inc. ( SNA Quick Quote SNA - Free Report) has been benefitting from robust sales across all segments and continued positive business momentum. The company remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. This led to the robust third-quarter 2021 results, wherein both top and bottom lines advanced year over year. It also marked the fifth straight earnings beat and the sixth consecutive sales surprise. In the past 30 days, the company’s estimates for 2021 and 2022 earnings per share have moved up by 1.5% and 0.9%, respectively. For 2021, its earnings estimates are pegged at $14.46 per share, suggesting a rise of 24.3% from the year-ago reported figure. We note that shares of this Zacks Rank #3 (Hold) stock rallied 27.2% year to date compared with the industry’s growth of 15.2%.
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The company’s robust business model helps enhance value-creation processes, which, in turn, improves safety, quality of service, customer satisfaction and innovation. Its growth strategy focuses on three critical areas, namely enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding critical industries in emerging markets.
Snap-on is also progressing well with its RCI program. The RCI process is designed to enhance organizational effectiveness and minimize costs, besides helping it boost sales and margins, and generate savings. Savings from the RCI initiative reflect gains from the continuous productivity and process improvement plans. Management intends to boost customer services along with enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments. Net sales grew 10.2%, driven by organic sales growth of 7%, a $9.6-million positive impact of foreign-currency translations, and $19.5 million in contributions from acquisitions. The top line also advanced 15.1% from third-quarter 2019’s reported figure, driven by organic sales growth of 11.1%, gains from acquisitions of $21 million and $13.6 million of positive impact from foreign currency. Backed by higher sales and margin expansion, adjusted earnings grew 8.8% year over year. Management noted that it progressed well beyond the pre-pandemic level of 2019 for the fifth successive time. The bottom line advanced 20.6% from third-quarter 2019. Headwinds
Despite these upsides, the company continues to reel under potential threats of new COVID-19 variants and supply-chain headwinds. Rising cost inflation, stemming from higher raw material expenses and increased transportation costs, is likely to act as a deterrent. The unfavorable currency also remains concerning.
We expect the company’s strong top-line trends along with the RCI initiative to offset cost headwinds and help sustain its positive momentum in the near future. Topping it, a
VGM Score of B and a long-term earnings growth rate of 9.5% reflect its inherent strength. 3 Better-Ranked Stocks to Consider PVH Corp ( PVH Quick Quote PVH - Free Report) currently sports a Zacks Rank #1 (Strong Buy) and has a long-term earnings growth rate of 59.1%. You can see . the complete list of today’s Zacks #1 Rank stocks here Gildan Activewear ( GIL Quick Quote GIL - Free Report) has an impressive long-term earnings growth rate of 28% and it presently flaunts a Zacks Rank #1. Lululemon Athletica ( LULU Quick Quote LULU - Free Report) has a long-term earnings growth rate of 20%. The company has a Zacks Rank #2 (Buy) at present.