Snap-on Incorporated SNA stock has been doing well for a while, recording a gain of 30.1% in a year. This growth comfortably outpaces the broader Consumer Discretionary sector’s return of 19.2% and the Zacks Tools - Handheld industry’s growth of 13.5% in the same period. SNA’s shares have also surpassed the S&P 500 index’s 24.9% increase in a year.
Currently priced at $338.92, Snap-on stock is trading at a 9.4% discount to its 52-week high of $373.90, reached on Nov. 27. However, it is trading at a 34% premium to its 52-week low mark.
Snap-on’s Growth Plans
SNA has been progressing well in its strategic efforts. The company has been enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding into critical industries in emerging markets. Management’s emphasis on the Rapid Continuous Improvement (RCI) process has been on track.
The RCI process is aimed at enhancing organizational effectiveness, reducing costs and boosting sales and margins. Savings from this initiative come from continuous productivity and process-improvement plans. Management intends to boost customer services, along with enhancing manufacturing and supply-chain capabilities, through the RCI initiatives and further investments.
Management expects the vehicle repair market to be sturdy. Snap-on is poised well, given its innovative hardware, particularly with the proprietary comprehensive database. The company is focused on customer connection and innovation. The specialty torque business of the Commercial & Industrial Group is progressing well.
The company has launched a lineup of hand tools focused on improving customer connection. With respect to the critical industries, increased torque product sales and activities in aviation and general industries seem encouraging. Additionally, SNA’s robust business model helps enhance value-creation processes, which in turn improves safety, quality of service, customer satisfaction and innovation. Such strengths are likely to bolster sales and profits.
SNA Price Performance
Image Source: Zacks Investment Research
Bumps in SNA’s Growth Trajectory
Snap-on remains prone to macroeconomic headwinds, including geographic challenges in critical industries. The company’s performance has been soft in various regions. Weak performance in China is acting as a deterrent. In addition, challenges in automotive remain concerning.
Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind that is hurting SNA’s performance. In addition, the company has been witnessing higher operating expenses owing to increased personnel and other associated costs. Operating expenses rose 3.5% year over year. The metric, as a percentage of net sales, saw a rise of 90 basis points in the most recent quarter.
SNA Stock’s Valuation
Going by the price/earnings ratio, Snap-on stock is currently trading at 16.97 on a forward 12-month basis compared with 17.26 for the industry. The stock is trading lower than its five-year high of 18.63.
Image Source: Zacks Investment Research
Conclusion
Management expects SNA’s markets and operations to have considerable resilience against the uncertainties of the operating landscape. Snap-on anticipates continued 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. For 2025, SNA anticipates progress along its defined runways for growth.
The Zacks Consensus Estimate for SNA’s 2025 sales and earnings per share (EPS) indicates a rise of 2.9% and 1.4%, respectively, year over year. For 2026, the consensus mark for sales and EPS implies a jump of 4% and 6.8%, respectively, year over year. This highlights analysts’ confidence in this Zacks Rank #3 (Hold) stock.
Key Consumer Discretionary Picks
We have highlighted three better-ranked stocks, namely, Ralph Lauren RL, Gildan Activewear GIL and Royal Caribbean RCL.
Ralph Lauren, a designer and distributor of premium lifestyle products, including apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ralph Lauren has a trailing four-quarter earnings surprise of 6.5%, on average. The Zacks Consensus Estimate for RL’s current financial-year sales indicates growth of 5.8% from the year-ago figure.
Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.
The consensus estimate for Gildan Activewear’s current financial-year EPS indicates growth of 15.6% from the year-ago figure.
Royal Caribbean, a cruise company, 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 18.7% and 72.1%, respectively, from the year-ago levels.
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Snap-On Incorporated (SNA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
