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Snap-On (SNA) Looks Prim: Will Growth Initiatives Aid It?
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Snap-On Inc. (SNA - Free Report) has been gaining from its Value Creation model and other cost-reduction plans. Its RCI program, designed to enhance organizational effectiveness and minimize costs, also bodes well. Higher sales volume and gains from RCI initiatives have been aiding margin expansion in the past few quarters. These factors have been bolstering the company’s performance over the past several quarters.
Notably, Snap-On boasts a robust surprise trend that continued in first-quarter 2022. This marked the seventh straight earnings beat and the eighth consecutive sales surprise. Both earnings and sales improved year over year.
Results gained from continued positive business momentum and contributions from its Value Creation plan. Higher sales and margin expansion aided the bottom line. The company also noted that it progressed well beyond the pre-pandemic level of 2019 for the seventh successive time.
Shares of this Zacks Rank #2 (Buy) company have gained 0.1% in the past three months against the industry’s 8.6% decline. The company’s shares also comfortably outperformed the Consumer Discretionary sector and the S&P 500’s declines of 25.3% and 9.4%, respectively, in the same period.
Image Source: Zacks Investment Research
Factors to Drive Growth
Snap-On’s robust business model helps enhance its value-creation processes, which, in turn, improve safety, quality of service, customer satisfaction and innovation. The company’s 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 remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. It is dedicated to various strategic principles and processes aimed at creating value in areas like RCI. The RCI process is designed to enhance organizational effectiveness and minimize costs beside helping Snap-On 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. Apart from this, Snap-On’s ability to innovate bodes well. The company has also been investing in new products and increasing brand awareness across the world.
In the first quarter, Snap-On’s margins were mainly aided by its RCI initiatives. Adjusted gross profit grew 4% year over year, including a positive impact of 30 bps from favorable currency movement. The rise in margin was backed by higher sales volume and gains from RCI initiatives, which more than offset higher material and other costs. The company’s operating earnings before financial services totaled $223.1 million, up 11.1% year over year. As a percentage of sales, the metric expanded 70 bps to 20.3% in the quarter under review. Consolidated operating earnings were $293.5 million, up 10.3% year over year. As a percentage of sales, operating earnings expanded 90 bps to 24.8%.
Conclusion
Although the threats of new COVID-19 variants and supply-chain headwinds are likely to persist in 2022, Snap-On appears to be a solid investment bet, buoyed by all the aforesaid tailwinds.
Analysts are quite bullish on the stock’s prospects, evident from its robust top and bottom-line estimates for 2022. The Zacks Consensus Estimate for 2022 sales and earnings are pegged at $4.4 billion and $15.74 per share, indicating growth of 3.6% and 5.5%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for 2022 earnings has moved up 2% in the past 30 days.
Other Stocks to Consider
We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and Ralph Lauren (RL - Free Report) .
Delta Apparel currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 41.1% on average. The DLA stock has declined 6.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 14.6% and 45.8%, respectively, from the year-ago period's reported numbers.
Oxford Industries currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 112.8%, on average. Shares of OXM have declined 5.9% in the past three months.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.2% and 13%, respectively, from the year-ago period's reported numbers.
Ralph Lauren presently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 94.1%, on average. Shares of RL have declined 24.6% in the past three months.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and earnings suggests growth of 39.8% and 378.8% from the year-ago period’s reported numbers, respectively.
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Snap-On (SNA) Looks Prim: Will Growth Initiatives Aid It?
Snap-On Inc. (SNA - Free Report) has been gaining from its Value Creation model and other cost-reduction plans. Its RCI program, designed to enhance organizational effectiveness and minimize costs, also bodes well. Higher sales volume and gains from RCI initiatives have been aiding margin expansion in the past few quarters. These factors have been bolstering the company’s performance over the past several quarters.
Notably, Snap-On boasts a robust surprise trend that continued in first-quarter 2022. This marked the seventh straight earnings beat and the eighth consecutive sales surprise. Both earnings and sales improved year over year.
Results gained from continued positive business momentum and contributions from its Value Creation plan. Higher sales and margin expansion aided the bottom line. The company also noted that it progressed well beyond the pre-pandemic level of 2019 for the seventh successive time.
Shares of this Zacks Rank #2 (Buy) company have gained 0.1% in the past three months against the industry’s 8.6% decline. The company’s shares also comfortably outperformed the Consumer Discretionary sector and the S&P 500’s declines of 25.3% and 9.4%, respectively, in the same period.
Image Source: Zacks Investment Research
Factors to Drive Growth
Snap-On’s robust business model helps enhance its value-creation processes, which, in turn, improve safety, quality of service, customer satisfaction and innovation. The company’s 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 remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. It is dedicated to various strategic principles and processes aimed at creating value in areas like RCI. The RCI process is designed to enhance organizational effectiveness and minimize costs beside helping Snap-On 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. Apart from this, Snap-On’s ability to innovate bodes well. The company has also been investing in new products and increasing brand awareness across the world.
In the first quarter, Snap-On’s margins were mainly aided by its RCI initiatives. Adjusted gross profit grew 4% year over year, including a positive impact of 30 bps from favorable currency movement. The rise in margin was backed by higher sales volume and gains from RCI initiatives, which more than offset higher material and other costs. The company’s operating earnings before financial services totaled $223.1 million, up 11.1% year over year. As a percentage of sales, the metric expanded 70 bps to 20.3% in the quarter under review. Consolidated operating earnings were $293.5 million, up 10.3% year over year. As a percentage of sales, operating earnings expanded 90 bps to 24.8%.
Conclusion
Although the threats of new COVID-19 variants and supply-chain headwinds are likely to persist in 2022, Snap-On appears to be a solid investment bet, buoyed by all the aforesaid tailwinds.
Analysts are quite bullish on the stock’s prospects, evident from its robust top and bottom-line estimates for 2022. The Zacks Consensus Estimate for 2022 sales and earnings are pegged at $4.4 billion and $15.74 per share, indicating growth of 3.6% and 5.5%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for 2022 earnings has moved up 2% in the past 30 days.
Other Stocks to Consider
We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and Ralph Lauren (RL - Free Report) .
Delta Apparel currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 41.1% on average. The DLA stock has declined 6.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 14.6% and 45.8%, respectively, from the year-ago period's reported numbers.
Oxford Industries currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 112.8%, on average. Shares of OXM have declined 5.9% in the past three months.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.2% and 13%, respectively, from the year-ago period's reported numbers.
Ralph Lauren presently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 94.1%, on average. Shares of RL have declined 24.6% in the past three months.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and earnings suggests growth of 39.8% and 378.8% from the year-ago period’s reported numbers, respectively.