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Robust Growth Efforts to Aid Snap-on (SNA) Amid Inflation Woes
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Snap-on Incorporated (SNA - Free Report) continues to witness positive business momentum. This, along with gains from its Value Creation plan, bodes well. This led to impressive third-quarter 2022 results, wherein the top and bottom lines beat the Zacks Consensus Estimate, marking the ninth straight earnings beat and the 10th consecutive sales surprise.
Adjusted earnings of $4.14 per share improved 16% from earnings of $3.57 reported in the prior-year quarter. Net sales grew 6.2% to $1,102.5 million, driven by organic sales growth of 10.4%. Management remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives.
In the third quarter, Snap-on’s adjusted gross profit grew 2.3% year over year. The upside was backed by higher sales volume and gains from the RCI initiatives, which more than offset higher material and other costs.
The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
The company remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives. The RCI process is designed to enhance organizational effectiveness and minimize costs, beside helping Snap-on to 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.
Snap-on’s ability to innovate bodes well. The company has been investing in new products and increasing brand awareness across the world.
Its robust business model helps to enhance value-creation processes, which, in turn, improves 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.
Higher sales volume and gains from the RCI initiatives boosted margins in the third quarter. The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
This Zacks Rank #2 (Buy) stock has gained 11.1% year to date compared with the industry’s growth of 13%.
Image Source: Zacks Investment Research
However, Snap-on continues to reel under supply-chain headwinds, which are likely to persist in 2022. Rising cost inflation, stemming from higher raw material expenses, and increased transportation costs, is likely to remain a deterrent.
Also, unfavorable currency remains concerning. In third-quarter 2022, the company’s sales were affected by an unfavorable foreign currency of $39.1 million. Sales in the Commercial & Industrial Group, Tools Group, and Repair Systems & Information Group segments included $20.8 million, $8.9 million and $11.2 million of unfavorable foreign currency, respectively.
Wrapping Up
All said, Snap-on’s cost-cutting efforts, RCI plan and solid business momentum are likely to help sustain its momentum and offset the aforementioned headwinds. An uptrend in the Zacks Consensus Estimate echoes a positive sentiment.
The Zacks Consensus Estimate for Snap-on’s 2022 sales and EPS suggests growth of 5.6% and 10.5%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 2.2% to $16.49 over the past 60 days. Topping it, a long-term earnings growth rate of 6.9% reflects its inherent strength.
lululemon presently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Boyd Gaming currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.2%, on average. BYD has a long-term earnings growth rate of 12.8%.
The Zacks Consensus Estimate for BYD’s current financial year’s sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported numbers.
Hyatt currently carries a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has gained 19.4% in the past year.
The Zacks Consensus Estimate for H’s current financial year's sales and EPS indicates surges of 92.2% and 121%, respectively, from the year-ago period’s reported levels.
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Robust Growth Efforts to Aid Snap-on (SNA) Amid Inflation Woes
Snap-on Incorporated (SNA - Free Report) continues to witness positive business momentum. This, along with gains from its Value Creation plan, bodes well. This led to impressive third-quarter 2022 results, wherein the top and bottom lines beat the Zacks Consensus Estimate, marking the ninth straight earnings beat and the 10th consecutive sales surprise.
Adjusted earnings of $4.14 per share improved 16% from earnings of $3.57 reported in the prior-year quarter. Net sales grew 6.2% to $1,102.5 million, driven by organic sales growth of 10.4%. Management remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives.
In the third quarter, Snap-on’s adjusted gross profit grew 2.3% year over year. The upside was backed by higher sales volume and gains from the RCI initiatives, which more than offset higher material and other costs.
The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
The company remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives. The RCI process is designed to enhance organizational effectiveness and minimize costs, beside helping Snap-on to 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.
Snap-on’s ability to innovate bodes well. The company has been investing in new products and increasing brand awareness across the world.
Its robust business model helps to enhance value-creation processes, which, in turn, improves 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.
Higher sales volume and gains from the RCI initiatives boosted margins in the third quarter. The company’s operating earnings before financial services totaled $223.5 million, up 11% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 20.3% in the third quarter. Consolidated operating earnings (including financial services) were $289.9 million, up 6.6% year over year. As a percentage of sales, operating earnings expanded 20 bps to 24.4%.
This Zacks Rank #2 (Buy) stock has gained 11.1% year to date compared with the industry’s growth of 13%.
Image Source: Zacks Investment Research
However, Snap-on continues to reel under supply-chain headwinds, which are likely to persist in 2022. Rising cost inflation, stemming from higher raw material expenses, and increased transportation costs, is likely to remain a deterrent.
Also, unfavorable currency remains concerning. In third-quarter 2022, the company’s sales were affected by an unfavorable foreign currency of $39.1 million. Sales in the Commercial & Industrial Group, Tools Group, and Repair Systems & Information Group segments included $20.8 million, $8.9 million and $11.2 million of unfavorable foreign currency, respectively.
Wrapping Up
All said, Snap-on’s cost-cutting efforts, RCI plan and solid business momentum are likely to help sustain its momentum and offset the aforementioned headwinds. An uptrend in the Zacks Consensus Estimate echoes a positive sentiment.
The Zacks Consensus Estimate for Snap-on’s 2022 sales and EPS suggests growth of 5.6% and 10.5%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 2.2% to $16.49 over the past 60 days. Topping it, a long-term earnings growth rate of 6.9% reflects its inherent strength.
Other Stocks to Consider
Some other top-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Boyd Gaming (BYD - Free Report) and Hyatt (H - Free Report) .
lululemon presently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Boyd Gaming currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.2%, on average. BYD has a long-term earnings growth rate of 12.8%.
The Zacks Consensus Estimate for BYD’s current financial year’s sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported numbers.
Hyatt currently carries a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has gained 19.4% in the past year.
The Zacks Consensus Estimate for H’s current financial year's sales and EPS indicates surges of 92.2% and 121%, respectively, from the year-ago period’s reported levels.