Back to top

Image: Bigstock

Snap-on's (SNA) Product Launch Drive Looks Promising

Read MoreHide Full Article

On Aug 26, we issued an updated research report on Kenosha, WI-based Snap-on Incorporated (SNA - Free Report) , which manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users. The company currently carries a Zacks Rank #3 (Hold).

Last month, Snap-on added another earnings beat to its long-standing winning streak, with its second-quarter 2016 earnings surpassing the Zacks Consensus Estimate by 6.3%. The bottom line also reflected a striking improvement of 16.3% compared with the year-ago tally. A steady top-line growth and lower operating expenses, both contributed to rise in profit.

The Zacks Consensus Estimate has moved north over the last 30 days on the back of this striking performance, indicating bullish analyst sentiment.

Snap-on’s successful earnings streak over the past several quarters mirrors its capabilities to suitably leverage market opportunities for augmenting growth. The company continues to make significant efforts toward improving its operating efficiency through Snap-on Value Creation Processes that are instrumental in boosting safety standards, quality and customer connection.

SNAP-ON INC Price, Consensus and EPS Surprise

 

SNAP-ON INC Price, Consensus and EPS Surprise | SNAP-ON INC Quote

Snap-on has devised a comprehensive blueprint to drive growth in 2016, which involves critical areas like enhancing franchise network, expanding footprint in vehicle repair garage & vital industries, and penetrating emerging markets.

Snap-on is witnessing encouraging prospects in most of its business lines that signals toward brighter prospects going forward. The Repair Systems & Information segment has been gaining traction on the back of factors like rising penetration in emerging markets, persistent software and hardware upgrades, productivity enhancements. Moreover, the company’s broad product line adds to its strength.

Snap-on has launched a number of products across its segments in the recent past. Under the Commercial & Industrial Group segment, it launched three-quarter inch flank drive 12 point impact socket expected to be deployed extensively by power generation, mining and oil and gas sectors. This segment also launched the Snap-on 5S Dual Visual Control Cabinet. The Tools group continued its product launch spree with the introduction of new 1/4-inch Drive Extra Long Flex Head Ratchet, Snap-on 312 CF heavy-duty diagonal cutters with cushion grips and the low-profile swivel impact socket set, considering the surging demand for high-performance tools. Also, the Repair Systems & Information segment launched touch-screen diagnostic workstation, VERUS Edge and V3300 wheel aligner. Such new offerings are poised to benefit Snap-on in the forthcoming quarters.

However, softness in the Commercial & Industrial Group segment sales might prove to be a headwind. Further, currency fluctuations and other macroeconomic issues can continue to be a drag on the company’s financials. In the last reported quarter, unfavorable foreign currency translations reduced the company’s sales by about $10.2 million.

The ongoing softness in industrial markets which are affecting client spending may also thwart the growth momentum at Snap-on to some extent. In addition, the company remains vulnerable tofluctuations in petroleum and energy prices, which might raise its operating costs and hamper profitability. 

Stocks to Consider

Better-ranked stocks in the broader consumer discretionary sector include Electronic Arts Inc. (EA - Free Report) , Activision Blizzard, Inc. and Take-Two Interactive Software Inc. (TTWO - Free Report) , each carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Snap-On Incorporated (SNA) - free report >>

Take-Two Interactive Software, Inc. (TTWO) - free report >>

Electronic Arts Inc. (EA) - free report >>

Published in