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.
Snap-on's (SNA) Strategies Place the Stock on Growth Track
Read MoreHide Full Article
Snap-on Incorporated (SNA - Free Report) has been gaining from a continued positive business momentum and contributions from its Value Creation plan. The company remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. Higher sales volume, pricing actions, lower material and other costs, as well as gains from the company's RCI initiatives, have been aiding SNA’s margins.
The company reported impressive growth across operating segments in the fourth quarter of 2023. Both the top and bottom lines also improved year over year in the reported quarter. The bottom line surpassed the Zacks Consensus Estimate in fourth-quarter 2023, marking the 14th straight earnings beat.
Net sales grew 3.5% year over year in the fourth quarter. The increase can be attributed to organic sales growth of 2.2%, $5.5 million of acquisition-related sales and a $9.1-million positive impact of foreign currency translations. From a geographical standpoint, it saw year-over-year increases in both North and South America, along with Europe.
Consequently, shares of this Zacks Rank #3 (Hold) company have jumped 28.2% in the past year compared with the industry’s growth of 8.5%. The company’s shares also outpaced the sector’s gain of 12.5% and the S&P 500’s rise of 24.7%.
The Zacks Consensus Estimate for SNA’s current financial-year sales and earnings suggests improvements of 2.2% and 2.4%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
Trends Favoring Snap-On
SNA’s robust business model helps in enhancing 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.
Moreover, Snap-on 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, besides helping the company 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.
The RCI initiatives have played a crucial role in increasing sales volumes and enhancing pricing actions, which, in turn, have reduced material and other costs. Gross profit improved 3% year over year in the fourth quarter. The upside can be attributable to contributions from higher sales and pricing actions, lower material and other costs, and gains from the company's RCI initiatives.
This apart, Snap-on’s ability to innovate bodes well. The company has been investing in new products and increasing brand awareness across the world as well. The company recently highlighted the successful launch of innovative products, such as the Zeus Plus and the triple function ratchet, contributing to its growth. The company's capacity expansions were also emphasized, leading to improved performance in various segments.
Rising Operating Costs
Snap-on has been struggling with a surge in operating expenses, primarily driven by increased personnel and related costs. Operating expenses increased 2.2% year over year in the fourth quarter of 2023. The operating expenses, as a percentage of net sales, saw a rise of 40 basis points to 26.7% from the prior year.
Additionally, the company continues to witness macroeconomic headwinds. Rising cost inflation, stemming from higher raw material expenses and other costs, is a headwind that is hurting SNA’s performance. These headwinds might continue to affect its profitability in the near term.
Stocks to Consider
Some better-ranked companies in the Consumer Discretionary sector are Ralph Lauren (RL - Free Report) , Crocs (CROX - Free Report) and Gildan Activewear (GIL - Free Report) .
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. RL has a trailing four-quarter earnings surprise of 18.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RL’s fiscal 2024 sales and EPS indicates increases of 2.7% and 22.7%, respectively, from the year-ago period’s reported levels.
Crocs is one of the leading footwear brands with its focus on comfort and style. CROX carries a Zacks Rank of 2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 14.2%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 3.9% and 2.9%, respectively, from the year-ago reported figures.
Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. GIL currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales and earnings suggests growth of 1.7% and 14.4%, respectively, from the year-ago quarter. GIL has a negative trailing four-quarter surprise of 0.7%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Snap-on's (SNA) Strategies Place the Stock on Growth Track
Snap-on Incorporated (SNA - Free Report) has been gaining from a continued positive business momentum and contributions from its Value Creation plan. The company remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. Higher sales volume, pricing actions, lower material and other costs, as well as gains from the company's RCI initiatives, have been aiding SNA’s margins.
The company reported impressive growth across operating segments in the fourth quarter of 2023. Both the top and bottom lines also improved year over year in the reported quarter. The bottom line surpassed the Zacks Consensus Estimate in fourth-quarter 2023, marking the 14th straight earnings beat.
Net sales grew 3.5% year over year in the fourth quarter. The increase can be attributed to organic sales growth of 2.2%, $5.5 million of acquisition-related sales and a $9.1-million positive impact of foreign currency translations. From a geographical standpoint, it saw year-over-year increases in both North and South America, along with Europe.
Consequently, shares of this Zacks Rank #3 (Hold) company have jumped 28.2% in the past year compared with the industry’s growth of 8.5%. The company’s shares also outpaced the sector’s gain of 12.5% and the S&P 500’s rise of 24.7%.
The Zacks Consensus Estimate for SNA’s current financial-year sales and earnings suggests improvements of 2.2% and 2.4%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
Trends Favoring Snap-On
SNA’s robust business model helps in enhancing 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.
Moreover, Snap-on 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, besides helping the company 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.
The RCI initiatives have played a crucial role in increasing sales volumes and enhancing pricing actions, which, in turn, have reduced material and other costs. Gross profit improved 3% year over year in the fourth quarter. The upside can be attributable to contributions from higher sales and pricing actions, lower material and other costs, and gains from the company's RCI initiatives.
This apart, Snap-on’s ability to innovate bodes well. The company has been investing in new products and increasing brand awareness across the world as well. The company recently highlighted the successful launch of innovative products, such as the Zeus Plus and the triple function ratchet, contributing to its growth. The company's capacity expansions were also emphasized, leading to improved performance in various segments.
Rising Operating Costs
Snap-on has been struggling with a surge in operating expenses, primarily driven by increased personnel and related costs. Operating expenses increased 2.2% year over year in the fourth quarter of 2023. The operating expenses, as a percentage of net sales, saw a rise of 40 basis points to 26.7% from the prior year.
Additionally, the company continues to witness macroeconomic headwinds. Rising cost inflation, stemming from higher raw material expenses and other costs, is a headwind that is hurting SNA’s performance. These headwinds might continue to affect its profitability in the near term.
Stocks to Consider
Some better-ranked companies in the Consumer Discretionary sector are Ralph Lauren (RL - Free Report) , Crocs (CROX - Free Report) and Gildan Activewear (GIL - Free Report) .
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. RL has a trailing four-quarter earnings surprise of 18.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RL’s fiscal 2024 sales and EPS indicates increases of 2.7% and 22.7%, respectively, from the year-ago period’s reported levels.
Crocs is one of the leading footwear brands with its focus on comfort and style. CROX carries a Zacks Rank of 2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 14.2%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 3.9% and 2.9%, respectively, from the year-ago reported figures.
Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. GIL currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales and earnings suggests growth of 1.7% and 14.4%, respectively, from the year-ago quarter. GIL has a negative trailing four-quarter surprise of 0.7%, on average.