Markets
SNA

Snap-On Earnings Maintain Winning Streak in Q4, Up Y/Y

Snap-on Inc.SNA reported fourth-quarter 2015 net earnings per share of $2.22, which comfortably surpassed the Zacks Consensus Estimate of $2.16 per share by 2.8%. The bottom line also came 12.7% ahead of the year-ago figure of $1.97.

Snap-On Inc. (SNA) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Quarterly earnings benefited from a fall in operating expenses and higher operating earnings before financial services.

For 2015, the company's earnings per share came in at $8.10, up 13.5% year over year. Results for the full year were largely driven by growth in organic sales (up 7.1%).

Inside the Headlines

Net sales in the fourth quarter stood relatively flat year over year at $851.7 million (inching down 0.7%) but missed the Zacks Consensus Estimate of $879 million. Excluding acquisition-related expenses and favorable foreign currency translation effect, organic sales rose 7.3% year over year.

While modest sales growth in Snap-on Tools Group supported net sales improvement, sales slump in the Commercial & Industrial Group segment proved to be a headwind, offsetting the positive effect.

For 2015, total sales amounted to $3,352.8 million, up 2.3% year over year. While a rise in organic sales boosted full-year net sales performance, acquisition-related sales and currency fluctuations limited the same.

Segment-wise, Commercial & Industrial Group sales decreased 5.5% year over year to $281.8 million. Organic sales were down by $1.7 million, primarily due to lower sales in military and oil & gas markets that dragged the overall sales performance of this segment. Additionally, unfavorable foreign currency translation reduced sales by $14.7 million, thereby worsening the fall.

Snap-on Tools Group revenues improved 6.1% year over year to $411.2 million. Growth in this segment was largely driven by solid performance of both the U.S. and international franchise operations. Also, organic sales of the segment were up 8.7%.

Repair Systems & Information segment revenues inched down 0.8% year over year to $280.6 million. Meanwhile, organic sales of the segment improved 2.2% mainly on the back of higher sales of diagnostics and repair information products to repair shop owners and managers. Also, increased sales of OEM dealerships aided organic revenue growth. However, foreign currency fluctuations reduced revenues by $10.3 million; while unfavorable impact of acquisition-related expenses triggered a decline of $2.2 million. Both these factors offset the organic sales growth.

On the other hand, Financial Services business reported revenues of $63.1 million compared with $59.4 million in the year-ago quarter.

In addition, operating earnings before financial services for the fourth quarter rose to $162.3 million from $145.2 million in year-ago quarter.

In fourth-quarter 2015, the effective income tax rate was 31.1% compared to 32.1% in 2014.

Liquidity

At the end of the fourth quarter, Snap-on's cash and cash equivalents totaled $92.8 million compared with $132.9 million at the end of 2014. The company's long-term debt of $861.7 million declined marginally from $862.7 million at the end of 2014.

Going forward

Snap-on's successful earnings streak for several past quarters reflects its capabilities to suitably leverage market opportunities for maximizing growth. The company continues to make relentless efforts toward improving its operating efficiency through Snap-on Value Creation Processes that are driving huge improvement in standards of safety, quality and customer connection.

Going forward, Snap-on has devised a comprehensive blueprint for 2016 that involves critical areas like enhancing franchise network, expanding footprint in vehicle repair garage & vital industries, and penetrating emerging markets. For these initiatives, Snap-on expects to incur capital expenditure in a range of $80-$90 million in 2016. Moreover, the company expects the effective income tax rate for 2016 to be comparable with its 2015 full-year rate. However, currency fluctuations can prove to be a drag on the company's financials.

Snap-on currently has a Zacks Rank #3 (Hold). Better-ranked stocks include Dycom Industries Inc. DY , Chicago Bridge & Iron Company N.V. CBI and Granite Construction Incorporated GVA . All three stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CHICAGO BRIDGE (CBI): Free Stock Analysis Report

GRANITE CONSTRU (GVA): Free Stock Analysis Report

DYCOM INDS (DY): Free Stock Analysis Report

SNAP-ON INC (SNA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SNA DY GVA

Other Topics

Earnings Stocks