Yahoo Finance Snap-on (SNA) Stock Looks Well-Poised Amid Inflation Woes
Snap-on Inc. SNA looks promising on the back of continued positive business momentum and contributions from its Value Creation plan. This Zacks Rank #2 (Buy) company remains on track with its Rapid Continuous Improvement process and other cost-reduction initiatives.
The RCI process is designed to enhance organizational effectiveness and minimize costs beside helping Snap-on boost sales and margins, and generate savings. Savings from the RCI initiative reflect gains from the 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.
Also, Snap-on’s ability to innovate bodes well. The company has been investing in new products and increasing brand awareness across the world.
Its robust business model helps in enhancing value-creation processes, which, in turn, improves safety, quality of service, customer satisfaction and innovation. The company’s growth strategy focuses on three critical areas — enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding critical industries in emerging markets.
Also, robust organic sales growth and contributions from acquisitions remain upsides. This, along with gains from its RCI program, has been aiding margins for a while now. Higher sales and margin expansion boosted the bottom line in first-quarter 2022.
Its top and bottom lines beat the Zacks Consensus Estimate, marking the seventh straight earnings beat and the eighth consecutive sales surprise. The company also noted that it progressed well beyond the pre-pandemic level of 2019.
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Shares of SNA have lost 9.7% year to date but came ahead of the industry’s fall of 11.6%. It also fared better than the Consumer Discretionary sector and S&P 500’s declines of 33.7% and 20.2%, respectively.
However, the company continues to reel under potential threats of new COVID-19 variants and supply-chain headwinds, which are likely to persist in 2022. Rising cost inflation, stemming from higher raw material expenses and increased transportation costs, is likely to remain a deterrent.
Wrapping Up
Although the threats of new COVID-19 variants and supply-chain headwinds prevail, Snap-On remains well-placed for further growth on the back of cost-cutting efforts, RCI plan and solid business momentum.
An uptrend in the Zacks Consensus Estimate also echoes a positive sentiment. The Zacks Consensus Estimate for Snap-On’s 2022 sales and EPS suggests growth of 3.6% and 5.7%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 0.2% to $15.77 over the past 30 days. Topping it, a VGM Score of A and a long-term earnings growth rate of 7.9% reflects its inherent strength.
Other Stocks to Consider
Some other top-ranked stocks from the same industry are Delta Apparel DLA, Steven Madden SHOO and GIII Apparel Group GIII.
Steven Madden is involved in designing, sourcing, marketing and selling private-label footwear, handbags and accessories for women, men, and children. It currently flaunts a Zacks Rank #1 (Strong Buy). SHOO has a trailing four-quarter earnings surprise of 44%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Steven Madden’s current financial year’s sales and earnings suggests growth of 15.2% and 19.6%, respectively, from the year-ago period's reported numbers.
Delta Apparel, a manufacturer of knitwear products, currently sports a Zacks Rank #1. DLA has a trailing four-quarter earnings surprise of 95.5%, on average.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.
GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #2. GIL has a trailing four-quarter earnings surprise of 160.6%, on average.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago period’s reported numbers, respectively.
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