Snap-on Incorporated (SNA Quick QuoteSNA - Free Report) maintained its earnings beat streak, posting fourth-quarter 2016 net earnings of $2.47 per share. Earnings surpassed the Zacks Consensus Estimate of $2.41 by 2.5%. The bottom line also reflected an increase of 11.3% from the year-ago figure of $2.22.

The bottom line benefited from Snap-on’s robust business model and focus on value-creation processes. Also, organic top-line growth proved conducive to the earnings performance.

For full-year 2016, the company’s net earnings per share came in at $9.20, up 13.6% year over year.

Inside the Headlines

Net sales in the quarter increased 4.5% year over year to $889.8 million and topped the Zacks Consensus Estimate of $884 million. Excluding acquisition-related expenses and unfavorable foreign currency translation effect, organic sales rose 3.6% year over year.

Robust sales growth at Snap-on Systems & Information drove the top line along with decent performance from the other two segments. However, unfavorable foreign currency translation restricted revenue growth to some extent.

For full-year 2016, the company’s net sales totaled $3,430.4 million, up 2.3% from the 2015 level.

Segment-wise, Commercial & Industrial Group sales inched up 1.6% to $286.3 million. Organic sales were up 2.4% primarily owing to strong performance in the European-based hand tools business. Also, higher sales to customers in critical industries including military drove the top line at this segment. Unfavorable foreign currency translation had a $6.2 million-impact on sales, thereby offsetting organic growth to a large extent.

Snap-on’s Tools Group revenues continued to show strength and grew 1.5% year over year to $417.5 million. Growth at this segment was driven by solid U.S. and international franchise operations. Also, organic sales at the segment recorded an improvement of 3%.

Repair Systems & Information revenues rose 14% year over year to $319.8 million. Meanwhile, organic sales at the segment improved 8.9%. Higher sales of diagnostics and repair information products to independent repair shop owners and managers, OEM dealerships and undercar equipments, drove robust organic growth at the segment.

On the other hand, the Financial Services business reported revenues of $74.2 million, compared with $63.1 million in the year-ago quarter.

Operating earnings before financial services in the quarter came in at $51.6 million, up 14.7% from $45.0 million in the prior-year quarter.

Liquidity

At the year end, Snap-on’s cash and cash equivalents totaled $77.6 million, compared with $92.8 million at the end of 2015. The company’s long-term debt of $708.8 million represented a significant fall from $861.7 million at the end of 2015.

Q4 Activities

During the quarter, Snap-on purchased Sweden-based firm – Car-O-Liner – to reinforce its Repair Systems & Information Group position and fortify its hold in the auto and heavy duty markets. The company expects this acquisition and favorable industry trends to strengthen its relationship with repair shop owners and managers.

Snap-on also acquired torque wrench marker – Sturtevant Richmont — which is engaged in the designing, manufacturing and distributing of mechanical and electronic torque wrenches. Snap-on believes that this strategic buyout will improve its critical mechanical performance by addressing critical torque requirements.

To Conclude

Snap-on had yet another impressive year with earnings beating estimates all through the trailing four quarters. The company’s overarching business model, which aims to maximize value-creation by focusing on areas like safety, quality of service, customer satisfaction and innovation, has emerged as a tried and tested growth driver. Snap-on is committed to its rapid continuous improvement (RCI) program, designed to enhance organizational effectiveness and minimize costs.

Entering into 2017, Snap-on revealed plans to enhance the franchise network, expand ties with repair shop owners and managers, and foray into critical industries to strengthen hold in emerging markets. Solid prospects across business segments, a diversified portfolio and impressive traction of the newly launched products continue to add to the strength of this Zacks Rank #2 (Buy) company.

Other Stocks to Consider

Some other favorably placed stocks in the sector include Harman International Industries, Incorporated , Hyatt Hotels Corporation (H Quick QuoteH - Free Report) and Dolby Laboratories, Inc. (DLB Quick QuoteDLB - Free Report) . All the three companies hold the same Zacks Rank as Snap-on.

Harman International topped estimates thrice in the trailing four quarters, with an average beat of 9.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hyatt Hotels Corporation has an average positive surprise of 24.7%, having beaten estimates thrice over the trailing four quarters.

Dolby has a striking earnings surprise history, with an average surprise of 30.9% for the trailing four quarters, beating estimates each time.

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