Snap-on (SNA) AI Stock Analysis

851 Followers

Top Page

Snap-on

(NYSE:SNA)

71Outperform

Snap-on demonstrates solid financial health and a strong balance sheet, yet faces challenges such as declining organic sales and market uncertainties highlighted in the earnings call. Technical indicators suggest mixed momentum, and while the valuation is reasonable, external factors may weigh on performance.

Positive Factors

Aftermarket Fundamentals

The fundamentals of the automotive aftermarket remain solid, with factors like miles driven on U.S. roads recovering past pre-pandemic levels and ongoing increases in the size of the U.S. car parc.

Operational Efficiency

Snap-on is increasingly leveraging AI across all facets of its operation, driving both new product development and operational efficiencies.

Product Innovation

Snap-on's ongoing product innovation combined with increasing software and data solutions will continue to drive a further acceleration in Business Performance trends.

Negative Factors

Free Cash Flow

The firm generated free cash flow from operations of $203.4 million in Q1, down 23% year-over-year.

Sales Performance

Snap-on's Q1/25 financial results included a net sales decrease of 3.5% to $1.141 billion, impacted by a 2.3% decline in organic sales and a 1.2% impact from FX.

Tools Group Performance

The Tools Group was impacted by macroeconomic uncertainties that saw technicians accelerating their reluctance to purchase big-ticket financed products.

Snap-on (SNA) vs. S&P 500 (SPY)

Market Cap

$17.12B

Dividend Yield2.46%

Average Volume (3M)461.98K

Price to Earnings (P/E)17.1

Beta (1Y)0.79

Revenue Growth-0.88%

EPS Growth0.04%

CountryUS

Employees13,000

SectorIndustrials

Sector Strength88

IndustryManufacturing - Tools & Accessories

Share Statistics

EPS (TTM)4.51

Shares Outstanding52,291,023

10 Day Avg. Volume322,408

30 Day Avg. Volume461,983

Financial Highlights & Ratios

PEG Ratio-7.84

Price to Book (P/B)3.00

Price to Sales (P/S)0.00

P/FCF Ratio15.25

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$348.33

Price Target Upside6.23% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Snap-on Business Overview & Revenue Model

Company DescriptionSnap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments. The company offers hand tools, including wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools, torque measuring instruments, and other products; power tools, such as cordless, pneumatic, hydraulic, and corded tools; and tool storage products comprising tool chests, roll cabinets, and other products. It also provides handheld and computer-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics. In addition, the company offers solutions for the service of vehicles and industrial equipment that include wheel alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane equipment, collision repair equipment, vehicle air conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment, safety testing equipment, battery chargers, and hoists, as well as after-sales support services and training programs. Further, it provides financing programs to facilitate the sales of its products and support its franchise business. The company serves the aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation, and technical education industries, as well as vehicle dealerships and repair centers. Snap-on Incorporated was founded in 1920 and is based in Kenosha, Wisconsin.

How the Company Makes MoneySnap-on makes money through the sale of its wide range of professional tools and equipment. The company's revenue model is based on direct sales to professionals and businesses, as well as through a network of franchisees and distributors. Key revenue streams include the sale of hand and power tools, diagnostic equipment, and software solutions. Snap-on also generates income through its financing arm, Snap-on Credit, which provides financial services to franchisees and customers. Significant factors contributing to its earnings include strategic partnerships with automotive manufacturers, expansion into international markets, and continuous innovation in product offerings.

Snap-on Financial Statement Overview

Summary

Snap-on exhibits strong financial health with robust revenue growth, efficient operations, and solid cash flow generation. The balance sheet is strong with low leverage and high return on equity, though minor cost pressures are noted.

Income Statement

Very Positive

Snap-on has demonstrated strong revenue growth with a 3.0% increase in TTM over the previous year. The gross profit margin stands at 50.97%, indicating efficient cost management. The net profit margin is solid at 21.41%, and EBIT margin is robust at 27.45%, showcasing operational efficiency. However, a slight decline in EBIT from the previous year suggests potential cost pressures.

Balance Sheet

Positive

Snap-on maintains a strong balance sheet with an equity ratio of 68.42%, indicating a high level of financial stability. The debt-to-equity ratio is low at 0.23, reflecting conservative leverage. Return on equity is impressive at 18.49%, highlighting effective use of shareholders' equity. However, a slight increase in total liabilities must be monitored.

Cash Flow

Positive

The company's operating cash flow to net income ratio is strong at 1.14, indicating healthy cash generation relative to profits. Free cash flow growth is commendable, showcasing a 2.65% increase over the previous year. However, the free cash flow to net income ratio remains stable at 1.06, indicating limited growth in free cash flow relative to net income.

TTM	Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
4.77B	4.71B	5.11B	4.49B	4.25B	3.59B
	Gross Profit
2.43B	2.38B	2.62B	2.18B	2.11B	1.75B
	EBIT
1.31B	1.35B	1.31B	1.21B	1.12B	880.50M
	EBITDA
1.49B	1.52B	1.48B	1.35B	1.25B	991.40M
	Net Income Common Stockholders
1.02B	1.04B	1.01B	911.70M	820.50M	627.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.12B	1.36B	1.00B	757.20M	780.00M	923.40M
	Total Assets
7.67B	7.90B	7.54B	6.97B	6.76B	6.56B
	Total Debt
1.28B	1.29B	1.28B	1.25B	1.23B	1.48B
	Net Debt
159.70M	-67.70M	279.80M	488.50M	454.50M	561.20M
	Total Liabilities
2.50B	2.48B	2.45B	2.47B	2.56B	2.71B
	Stockholders Equity
5.14B	5.39B	5.07B	4.48B	4.18B	3.82B
Cash Flow		Free Cash Flow
1.08B	1.13B	1.06B	591.00M	896.50M	943.00M
	Operating Cash Flow
1.17B	1.22B	1.15B	675.20M	966.60M	1.01B
	Investing Cash Flow
-172.90M	-204.10M	-331.80M	-206.20M	-290.40M	-187.80M
	Financing Cash Flow
-679.20M	-649.80M	-572.90M	-485.00M	-818.80M	-84.30M

Snap-on Technical Analysis

Technical Analysis Sentiment

Positive

Last Price327.89

Price Trends

50DMA

323.96

Positive

100DMA

332.42

Negative

200DMA

320.05

Positive

Market Momentum

MACD

0.60

Negative

RSI

56.91

Neutral

STOCH

85.46

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNA, the sentiment is Positive. The current price of 327.89 is above the 20-day moving average (MA) of 313.24, above the 50-day MA of 323.96, and above the 200-day MA of 320.05, indicating a bullish trend. The MACD of 0.60 indicates Negative momentum. The RSI at 56.91 is Neutral, neither overbought nor oversold. The STOCH value of 85.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SNA.

Snap-on Risk Analysis

Snap-on disclosed 26 risk factors in its most recent earnings report. Snap-on reported the most risks in the “Ability to Sell” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Snap-on Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LECO	76 Outperform	$10.92B	24.14	34.83%	1.49%	-2.29%	-14.49%
RBC	73 Outperform	$11.63B	50.00	8.35%	―	4.62%	21.58%
SNA	71 Outperform	$17.12B	17.13	19.15%	2.46%	-0.88%	0.04%
TKR	69 Neutral	$5.08B	15.67	11.85%	1.87%	-3.69%	-11.76%
KMT	69 Neutral	$1.65B	15.67	8.69%	3.69%	-2.93%	2.74%
SWK	68 Neutral	$11.42B	31.35	4.03%	4.55%	-3.04%	―
Sector *	61 Neutral	$705.10M	7.13	6.37%	3.64%	1.68%	-24.42%

* Industrials Sector Average

Performance Comparison

SNA

Snap-on

327.89

58.15

21.56%

KMT

Kennametal

21.52

-3.64

-14.47%

LECO

Lincoln Electric Holdings

197.92

-26.85

-11.95%

RBC

RBC Bearings

367.27

99.71

37.27%

SWK

Stanley Black & Decker

70.70

-15.88

-18.34%

TKR

Timken Company

72.49

-16.71

-18.73%

Snap-on Earnings Call Summary

Earnings Call Date:Apr 17, 2025

(Q1-2025)

% Change Since: -1.24%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Negative

The earnings call highlights some strong areas such as the RSNI division and the positive impact of AI on database efficiency. However, the overall sentiment is overshadowed by significant challenges including a decline in organic sales, decreased tool storage demand, and external disruptions like weather and tariffs affecting technician confidence and consumer sentiment.

Q1-2025 Updates

Positive Updates

Strong Performance in RSNI Division

RSNI organic sales rate was about 3.7%, and when excluding intercompany declines, it was in the 4% range. The software within RSNI saw a significant increase and the division had a strong quarter with profitability up nicely by 140 basis points to 25.7%.

Positive Impact of AI on Database Efficiency

AI and natural language processing have improved the efficacy of translating technician repairs into the database, enhancing the effectiveness of databases.

Advantageous Manufacturing Capacity

The expansion of manufacturing capacity, particularly in tool storage and lockers, positions the company well against tariffs, with reduced backlog issues.

Negative Updates

Overall Organic Sales Decline

Company experienced a 6.8% decline in organic sales, exacerbated by external factors such as tariffs, leading to a challenging period.

Decreased Tool Storage Demand

Tool storage demand significantly declined, with originations down 11.7% compared to the previous year.

Weather-Related Disruptions

Regional kickoffs were down due to several events being disrupted by snow, affecting participation and evaluation.

Technician Confidence and Consumer Sentiment

Technician confidence fell, influenced by uncertain economic conditions, leading to reduced demand in certain sectors.

Company Guidance

During the call, Snap-on provided guidance indicating a challenging first fiscal quarter for 2025, with organic sales down 6.8%. Despite this, the RS&I division showed strength, achieving an organic sales growth rate of approximately 4% when adjusted for intercompany declines. The division's profitability increased, with software playing a significant role, contributing to a 140 basis point improvement in margins to 25.7%. The Tools Group faced headwinds, particularly in tool storage, which saw an 11.7% decline in originations. Hand tools remained stable, but diagnostics sales, particularly lower-end models like the Solus, performed well. The company observed a 3.3% decline in technician hours worked, attributing it to reduced elective maintenance services. Despite uncertainties, particularly around tariffs, Snap-on expressed confidence in its pivot strategy toward lower-priced items, emphasizing ongoing product development and promotional efforts.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.