We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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 Gross Margin Expands: Can RCI Keep Driving Gains?
Read MoreHide Full Article
Key Takeaways
Snap-on's gross margin expanded 90 basis points to 51.4%, driven by higher volumes and RCI savings.
Commercial & Industrial gross margin rose 260 basis points to 42.6% on stronger sales and RCI savings.
RCI, sourcing shifts and in-sourcing are helping Snap-on manage inflation, tariffs and margin pressure.
Snap-on Incorporated’s (SNA - Free Report) gross-margin performance in the second quarter reflected the continued benefits of its Rapid Continuous Improvement, or RCI, initiatives, along with stronger volumes across parts of the business. Management highlighted RCI as an important lever for improving manufacturing efficiency and offsetting cost pressures, particularly in an environment marked by material inflation, tariffs and supply-chain changes. The company has also been adjusting sourcing and production across its global manufacturing footprint, complementing RCI efforts and helping protect profitability.
Consolidated gross margin expanded 90 basis points year over year to 51.4%, with management attributing the improvement primarily to higher volumes and savings from RCI initiatives. The Commercial & Industrial Group was particularly strong, with gross margin rising 260 basis points to 42.6%, supported by increased sales and RCI savings. However, the Snap-on Tools Group’s gross margin slipped 30 basis points to 48%, mainly due to an unfavorable product-mix shift, while RS&I gross margin declined 50 basis points to 46.3% because of higher sales of lower-margin products.
Looking ahead, RCI remains central to Snap-on’s approach to managing margin pressure. Management indicated a preference for addressing cost inflation through continuous improvement, sourcing changes and new-product innovation rather than relying heavily on pricing. In-sourcing certain power-tool production and making similar adjustments in torque products are also helping reduce tariff exposure. Still, product mix and continued technology and personnel investments could limit margin expansion in some businesses, making sustained RCI savings and operating efficiencies important to further profitability gains.
SNA’s Price Performance, Valuation & Estimates
Shares of Snap-on have gained 2.4% in the past six months compared with the industry’s growth of 1.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, SNA trades at a forward price-to-earnings ratio of 17.92X compared with the industry’s average of 18.08X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SNA’s 2026 and 2027 earnings per share (EPS) indicates year-over-year growth of 0.9% and 7.3%, respectively. The company’s EPS estimate for 2026 and 2027 has remained stable in the past 30 days.
Image Source: Zacks Investment Research
Snap-on stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks have been discussed below:
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the Wrangler, Lee and Helly Hansen brands. At present, KTB carries a Zacks Rank of 2 (Buy). You cansee the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for KTB’s current fiscal-year sales and earnings implies a decline of 14.3% and 6.1%, respectively, from the year-ago figures. KTB delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Savers Value Village, Inc. (SVV - Free Report) , a thrift operator, sells second-hand merchandise in retail stores in the United States, Canada and Australia. SVV currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for SVV’s current financial-year sales and earnings is expected to rise 6.1% and 6.7%, respectively, from the corresponding year-ago reported figures. SVV delivered a trailing four-quarter negative earnings surprise of 1.6%, on average.
Vince Holding Corp. (VNCE - Free Report) provides luxury apparel and accessories in the United States and internationally. It operates through Vince Wholesale and Vince Direct-to-Consumer segments. At present, the company carries a Zacks Rank of 2.
The Zacks Consensus Estimate for VNCE’s current fiscal-year sales and earnings implies growth of 12.7% and 172.7%, respectively, from the year-ago reported figures. VNCE has delivered a trailing four-quarter earnings surprise of 561.4%, on average.
View the Zacks #1 Rank List
Image: Shutterstock
Snap-on's Gross Margin Expands: Can RCI Keep Driving Gains?
Key Takeaways
Snap-on Incorporated’s (SNA - Free Report) gross-margin performance in the second quarter reflected the continued benefits of its Rapid Continuous Improvement, or RCI, initiatives, along with stronger volumes across parts of the business. Management highlighted RCI as an important lever for improving manufacturing efficiency and offsetting cost pressures, particularly in an environment marked by material inflation, tariffs and supply-chain changes. The company has also been adjusting sourcing and production across its global manufacturing footprint, complementing RCI efforts and helping protect profitability.
Consolidated gross margin expanded 90 basis points year over year to 51.4%, with management attributing the improvement primarily to higher volumes and savings from RCI initiatives. The Commercial & Industrial Group was particularly strong, with gross margin rising 260 basis points to 42.6%, supported by increased sales and RCI savings. However, the Snap-on Tools Group’s gross margin slipped 30 basis points to 48%, mainly due to an unfavorable product-mix shift, while RS&I gross margin declined 50 basis points to 46.3% because of higher sales of lower-margin products.
Looking ahead, RCI remains central to Snap-on’s approach to managing margin pressure. Management indicated a preference for addressing cost inflation through continuous improvement, sourcing changes and new-product innovation rather than relying heavily on pricing. In-sourcing certain power-tool production and making similar adjustments in torque products are also helping reduce tariff exposure. Still, product mix and continued technology and personnel investments could limit margin expansion in some businesses, making sustained RCI savings and operating efficiencies important to further profitability gains.
SNA’s Price Performance, Valuation & Estimates
Shares of Snap-on have gained 2.4% in the past six months compared with the industry’s growth of 1.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, SNA trades at a forward price-to-earnings ratio of 17.92X compared with the industry’s average of 18.08X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SNA’s 2026 and 2027 earnings per share (EPS) indicates year-over-year growth of 0.9% and 7.3%, respectively. The company’s EPS estimate for 2026 and 2027 has remained stable in the past 30 days.
Image Source: Zacks Investment Research
Snap-on stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks have been discussed below:
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the Wrangler, Lee and Helly Hansen brands. At present, KTB carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for KTB’s current fiscal-year sales and earnings implies a decline of 14.3% and 6.1%, respectively, from the year-ago figures. KTB delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Savers Value Village, Inc. (SVV - Free Report) , a thrift operator, sells second-hand merchandise in retail stores in the United States, Canada and Australia. SVV currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for SVV’s current financial-year sales and earnings is expected to rise 6.1% and 6.7%, respectively, from the corresponding year-ago reported figures. SVV delivered a trailing four-quarter negative earnings surprise of 1.6%, on average.
Vince Holding Corp. (VNCE - Free Report) provides luxury apparel and accessories in the United States and internationally. It operates through Vince Wholesale and Vince Direct-to-Consumer segments. At present, the company carries a Zacks Rank of 2.
The Zacks Consensus Estimate for VNCE’s current fiscal-year sales and earnings implies growth of 12.7% and 172.7%, respectively, from the year-ago reported figures. VNCE has delivered a trailing four-quarter earnings surprise of 561.4%, on average.