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Snap-on's Growth Plans on Track: What Should Investors Expect?
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Snap-on Incorporated (SNA - Free Report) is in good shape, thanks to its solid business strategies. The company has been benefiting from its value-creation processes and Rapid Continuous Improvement (RCI) initiatives. SNA’s robust business model helps enhance value-creation processes, which in turn improves safety, quality of service, customer satisfaction and innovation.
Let’s delve deeper.
Factors Working in Favor of SNA
Snap-on’s growth strategy is focused on three areas, enhancing its franchise network, improving relationships with repair shop owners and managers and expanding critical industries in emerging markets. SNA’s strategic efforts aim at creating values, thereby boosting organizational effectiveness and minimizing costs, and in turn, driving sales and margins.
Savings from the RCI initiative reflect gains from the continuous productivity and process-improvement plans. Management looks to enrich customer services apart from enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments. In addition, Snap-on’s ability to innovate seems encouraging as it is continuously investing in new products and increasing brand awareness across the globe.
Image Source: Zacks Investment Research
The vehicle OEMs, dealerships and independent shops have been experiencing positive trends, and therefore investing in tools and equipment. This is likely to expand the capabilities supporting the influx of new models and the complexity of repair. Snap-on’s Repair Systems & Information Group strengthened its reach into OEM dealership programs and positions across the independent garages. Such positives highlight the company’s solid potential and opportunities with the repair shop owners and managers.
The economic outlook for vehicle repair remains positive, thus further supporting the company’s growth. Additionally, the Tools Group has been concentrating on product development, manufacturing changes and sales efforts for a while. The aforesaid strengths are likely to deliver sustained growth, boosting sales and profits.
Bottlenecks to SNA’s Growth Path
Despite its best efforts, SNA is not immune to tough macroeconomic challenges. Key headwinds include disruptions in Europe, with several countries experiencing recession fears and economic instability. Delayed financial recovery in China is acting as a deterrent. Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind.
These trends led to a year-over-year drop of 1% in overall sales in the second quarter of 2024. Also, organic sales fell 1.1%, due to a $ 5.7 million impact of unfavorable foreign currency translations, partly mitigated by $7.3 million from acquisition-related sales. Also, the Tools Group segment’s sales slipped 7.9% year over year on a 7.7% decline in organic sales and $0.8 million of unfavorable foreign currency translation. Lower activity in the U.S. operations, somewhat negated by increased sales in its international operations, hurt the segment’s organic sales.
Conclusion
Nevertheless, Snap-on has been making efforts to tackle challenges. Management expects progress by leveraging capabilities in the automotive repair arena, as well as expanding its customer base in automotive repair and across geographies, including critical industries. The company believes that its markets and operations have considerable resilience against the uncertainties of the environment.
Analysts seem optimistic about Snap-on. The Zacks Consensus Estimate for 2024 earnings per share (EPS) is currently pegged at $19.24, indicating growth of 2.6%.
Snap-on stock gained 10.5% in the past year compared with the industry’s 8.3% growth. Investors, who already invested in the stock, can retain this Zacks Rank #3 (Hold) company.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago reported levels.
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Snap-on's Growth Plans on Track: What Should Investors Expect?
Snap-on Incorporated (SNA - Free Report) is in good shape, thanks to its solid business strategies. The company has been benefiting from its value-creation processes and Rapid Continuous Improvement (RCI) initiatives. SNA’s robust business model helps enhance value-creation processes, which in turn improves safety, quality of service, customer satisfaction and innovation.
Let’s delve deeper.
Factors Working in Favor of SNA
Snap-on’s growth strategy is focused on three areas, enhancing its franchise network, improving relationships with repair shop owners and managers and expanding critical industries in emerging markets. SNA’s strategic efforts aim at creating values, thereby boosting organizational effectiveness and minimizing costs, and in turn, driving sales and margins.
Savings from the RCI initiative reflect gains from the continuous productivity and process-improvement plans. Management looks to enrich customer services apart from enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments. In addition, Snap-on’s ability to innovate seems encouraging as it is continuously investing in new products and increasing brand awareness across the globe.
Image Source: Zacks Investment Research
The vehicle OEMs, dealerships and independent shops have been experiencing positive trends, and therefore investing in tools and equipment. This is likely to expand the capabilities supporting the influx of new models and the complexity of repair. Snap-on’s Repair Systems & Information Group strengthened its reach into OEM dealership programs and positions across the independent garages. Such positives highlight the company’s solid potential and opportunities with the repair shop owners and managers.
The economic outlook for vehicle repair remains positive, thus further supporting the company’s growth. Additionally, the Tools Group has been concentrating on product development, manufacturing changes and sales efforts for a while. The aforesaid strengths are likely to deliver sustained growth, boosting sales and profits.
Bottlenecks to SNA’s Growth Path
Despite its best efforts, SNA is not immune to tough macroeconomic challenges. Key headwinds include disruptions in Europe, with several countries experiencing recession fears and economic instability. Delayed financial recovery in China is acting as a deterrent. Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind.
These trends led to a year-over-year drop of 1% in overall sales in the second quarter of 2024. Also, organic sales fell 1.1%, due to a $ 5.7 million impact of unfavorable foreign currency translations, partly mitigated by $7.3 million from acquisition-related sales. Also, the Tools Group segment’s sales slipped 7.9% year over year on a 7.7% decline in organic sales and $0.8 million of unfavorable foreign currency translation. Lower activity in the U.S. operations, somewhat negated by increased sales in its international operations, hurt the segment’s organic sales.
Conclusion
Nevertheless, Snap-on has been making efforts to tackle challenges. Management expects progress by leveraging capabilities in the automotive repair arena, as well as expanding its customer base in automotive repair and across geographies, including critical industries. The company believes that its markets and operations have considerable resilience against the uncertainties of the environment.
Analysts seem optimistic about Snap-on. The Zacks Consensus Estimate for 2024 earnings per share (EPS) is currently pegged at $19.24, indicating growth of 2.6%.
Snap-on stock gained 10.5% in the past year compared with the industry’s 8.3% growth. Investors, who already invested in the stock, can retain this Zacks Rank #3 (Hold) company.
Stocks to Consider
We have highlighted three better-ranked stocks, namely, G-III Apparel Group (GIII - Free Report) , Crocs (CROX - Free Report) and Royal Caribbean (RCL - Free Report) .
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago reported levels.