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Snap-on (SNA) to Report Q2 Earnings: What's in the Cards?

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Snap-on Inc. (SNA - Free Report) is scheduled to report second-quarter 2018 results on Jul 19, before the opening bell. Notably, the company boasts an excellent surprise history, having surpassed earnings estimates for the last seven years.

The Zacks Consensus Estimate for the second quarter is pegged at $2.95, which reflects an improvement of 13.5% year over year. However, the consensus mark moved south by a penny in the last 30 days.

Let’s see how things are shaping up for this announcement.

Factors Likely to Influence 2Q18

Snap-on’s solid prospects in most of its business lines are likely to drive growth. Notably, its Repair Systems & Information business has been gaining traction, courtesy of rising penetration in emerging markets apart from continued software and hardware upgrades as well as productivity enhancements. In first-quarter 2018, the segment continued to display strength backed by higher sales of diagnostics and repair information products to independent repair shop owners and managers as well as OEM dealerships, which boosted its organic growth as well.

In addition, the company’s Commercial & Industrial Group division has been performing well, courtesy of increased sales to customers in critical industries and strong European-based hand tools business. Rising Asia/Pacific operations also contributed to growth.

Moreover, Snap-on’s robust business model helps in enhancing the value-creation processes, which, in turn, increases safety, quality of service, customer satisfaction and innovation. These factors are likely to drive Snap-on’s upcoming quarterly results.

Notably, analysts polled by Zacks expect quarterly revenues to come in at $956.3 million, up about 3.8% from year-ago quarter.

However, Snap-on has been witnessing softness across its Tools Group segment for a while now. This downside can be attributed to lower sales in the company’s U.S. franchise operations, which is hindering the segment’s growth. In addition, stiff industry competition across its segments and challenges in various markets remain concerns.

Sluggish oil market activities, volatility in the prices and high currency fluctuation risks further add to its woes. These headwinds might dent the company’s top line and overall profitability.

Zacks Model

Our proven model does not show that Snap-on is likely to beat earnings estimates in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Snap-on has an Earnings ESP of +0.51%. However, the company’s Zacks Rank #4 (Sell) makes surprise prediction difficult.

Stocks Likely to Beat Earnings

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

lululemon athletica inc. (LULU - Free Report) has an Earnings ESP of +0.88% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Columbia Sportswear Co. (COLM - Free Report) has an Earnings ESP of +51.61% and a Zacks Rank of 2.

Michael Kors Holdings Ltd. has an Earnings ESP of +0.87% and a Zacks Rank #3.

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