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Things You Should Know Prior to Snap-on's (SNA) Q3 Earnings

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Snap-on Inc. (SNA - Free Report) is scheduled to report third-quarter 2019 results on Oct 17, before the opening bell.

Notably, the company delivered a positive earnings surprise in three of the trailing four quarters, the average beat being 1.2%. Let’s see how things are shaping up prior to the company’s upcoming earnings release.

Which Way Are Q3 Estimates Headed?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.95, indicating an increase of about 2.4% from the year-earlier reported figure. Estimates remained stable over the past 30 days.

Snap-on Incorporated Price and EPS Surprise

Snap-On Incorporated Price and EPS Surprise

Snap-on Incorporated price-eps-surprise | Snap-on Incorporated Quote

For quarterly revenues, the consensus mark is pinned at $914.9 million, implying a 1.9% rise from the figure reported a year ago.

What You Should Know Prior to 3Q19

Snap-on’s robust business model and focus on value-creation processes have been driving the company’s earnings performance for the past several quarters. Backed by these efforts, the company has also been improving safety, quality of service, customer satisfaction and innovation. We expect the continuation of these trends to drive results in the third quarter.

Moreover, the company’s growth strategy focuses on three critical areas, namely enhancement of the franchise network, improvement of the relationship with repair shop owners and manager, and expansion of critical industries in emerging markets. Furthermore, Snap-on is dedicated to various strategic principles and processes aimed at creating value in areas like Rapid Continuous Improvement (RCI). The RCI process is designed to enhance organizational effectiveness and minimize costs besides helping the company to boost sales and margins, and generate savings.

These apart, Snap-on’s efforts to innovate bode well and are likely to drive results in the third quarter. Notably, the company’s Repair Group segment, which remained sluggish over the last few quarters, returned to growth in the second quarter. Moreover, its recent Cognitran buyout is likely to boost the Repair Group segment.

In the automotive repair area, management expects to leverage capabilities besides strengthening the overall professional customer base. Apart from automotive repair, Snap-on expects to add customers from adjacent markets, newer geographies and other areas like critical industries.

However, soft sales have been a concern for the company over the past few quarters. In the second quarter, sales dropped 0.3% due to adverse impacts of foreign currency translations, partly offset by organic sales growth and contributions from acquisitions. The decline in sales across the Commercial & Industrial Group segment also hurt the company’s top line. These factors might hurt the company’s results in the quarter to be reported.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Snap-on is likely to beat earnings estimates in the third 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.

Although Snap-on’s Zacks Rank #3 increases the predictive power of earnings beat, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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:

Hasbro, Inc. (HAS - Free Report) has an Earnings ESP of +3.47% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard, Inc. (ATVI - Free Report) has an Earnings ESP of +3.25% and a Zacks Rank of 3.

Gildan Activewear Inc. (GIL - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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