Yahoo Finance Snap-on's Q3 Earnings Beat Estimates, Organic Sales Fall 1.7%
Snap-on Inc. SNA reported third-quarter 2024 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed. While revenues declined year over year, earnings increased from the year-ago period.
This Zacks Rank #3 (Hold) company’s shares have gained 23.5% in the past six months compared with the industry's 10.4% growth.
SNA’s Quarterly Performance: Key Metrics and Insights
Snap-on’s earnings of $4.70 per share beat the Zacks Consensus Estimate of $4.58. The figure improved from earnings of $4.51 per share reported in the year-ago quarter.
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Net sales dipped 1.1% year over year to $1,147 million and fell short of the Zacks Consensus Estimate of $1,156 million. This decline was due to a 1.7% reduction in organic sales and $0.3 million from unfavorable foreign currency translation, which was partly mitigated by $7.2 million from acquisition-related sales.
The gross profit of $587.8 million inched up 1.7% year over year while the gross margin expanded 130 basis points (bps) year over year to 51.2%. We expected a gross margin of 49.9%, flat with the year-ago quarter.
Snap-On Incorporated Price, Consensus and EPS Surprise
Snap-On Incorporated price-consensus-eps-surprise-chart | Snap-On Incorporated Quote
The company’s operating earnings before financial services totaled $252.4 million, up 2.9% year over year. As a percentage of sales, operating earnings before financial services expanded 80 bps to 22% in the third quarter. Financial Services unit's operating earnings were $71.7 million, up 3.3% year over year.
Consolidated operating earnings (including financial services) were $324.1 million, up 3% year over year. As a percentage of sales, operating earnings expanded 120 bps year over year to 28.3%.
Snap-on’s Segmental Analysis
Sales in the Commercial & Industrial Group slipped 0.2% from the year-ago quarter to $365.7 million on an organic sales drop of 2.1%. Net sales were aided by $7.2 million of acquisition-related sales and partly by $0.1 million of unfavorable currency translations. Organic sales fell in both the segment’s power tools and European hand-tool operations, somewhat offset by increased sales to customers in critical industries comprising the specialty torque business. For the quarter, we expected sales of $377.4 million from the segment.
The Tools Group segment’s sales declined 2.9% year over year to $500.5 million, which beat our estimate of $485 million. The dip was due to an organic sales decline of 3.1%, partly offset by a $0.9 million positive impact of foreign currency. Organic sales declined on lower activity in the U.S. operations, somewhat negated by increased sales in the segment’s international operations.
Sales in Repair Systems & Information Group fell 2.1% year over year to $422.7 million, with organic sales drop of 1.9%. This included weak sales of under-car equipment and lower activity with OEM dealerships, partly offset by increased sales of diagnostic and information products to the independent repair shop owners and managers. Also, unfavorable currency translations of $0.1 million hurt sales. Our estimate for sales from this segment was $440.9 million.
The Financial Services business’ revenues rose 5.8% year over year to $100.4 million. Our estimate for sales from this segment was $100.1 million.
SNA's Financial Snapshot
As of Sept. 28, 2024, Snap-on’s cash and cash equivalents totaled $1.3 billion, with shareholders’ equity (before non-controlling interest) of $5.5 billion. The company expects capital expenditures to be roughly $100 million in 2024, of which $65.4 million has been used in the nine months of the year.
What’s Ahead for SNA?
Management expects that the company’s markets and operations to have considerable resilience against the uncertainties of the operating landscape. For the rest of 2024, SNA anticipates progress along its defined runways for growth.
Management expects 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. The company expects an effective tax rate in the range of 22-23% for 2024.
Key Picks
We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Royal Caribbean RCL and lululemon athletica LULU.
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.
Royal Caribbean carries a Zacks Rank #2 (Buy) 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 earnings per share (EPS) indicates an increase of 18.2% and 70.9%, respectively, from the year-ago levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS indicates growth of 9.2% and 9.8%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 7.9%, on average.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Snap-On Incorporated (SNA) : Free Stock Analysis Report
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G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
