Company Reports

We raised our fair value estimate by 2% to $231 per share from $226. About half of the fair value estimate increase was attributed to the time value of money since our last update. We also increased our long-term estimates of profitability in the tools group.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe it will continue to be the top player in the tool industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong-performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe it will continue to be the top player in the tool industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong-performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

The market sent Snap-on’s shares down approximately 8% in intraday trading, following fourth-quarter earnings. We think investors are worried about growth prospects for the tools business in 2024. We agree the near term will be challenging, but we think Snap-on can still post positive sales growth in 2024. Longer term, we think Snap-on will benefit from solid auto repair demand. These factors together led us to raise our fair value estimate by 2% to $225 (from $221 previously).

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe it will continue to be the top player in the tool industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong-performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe it will continue to be the top player in the tool industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong-performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

We are raising our fair value estimate 11% to $221 per share (up from $198). Our fair value increase is largely a result of our increasing appreciation for Snap-on's sales opportunity in a full EV world. The company continues to engage auto manufacturers that are looking to Snap-on to develop new tools to service EVs with. We think new products designed for EVs will help partially offset lost sales due to sunsetting engine and transmission repair work.

The market sent Snap-on’s shares down 7% in intraday trading July 20 following the second-quarter earnings release. We think investors were concerned about the sales slowdown in the company's tool group. Management pointed to weakness in power tool volume, which was slower ahead of anticipated new product launches in the third quarter. We see this as more of a timing issue, with customers holding off on buying power tools until the new line comes out. For the year, we think Snap-on can increase sales by over 2% compared with 2022. While this may look muted, tool sales have been rather strong over the past couple of years and are proving to be a tough comparison. Tool revenue was up 18% in 2021 and 7% in 2022.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe it will continue to be the top player in the tool industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong-performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

The market sent Snap-on's shares up 9% in intraday trading after the company beat consensus estimates. Snap-on outperformed on the bottom line, growing 15% year on year to $4.60. The company has been growing sales at a good clip, thanks to solid repair demand. That said, we elected to maintain our $193 fair value estimate, given our forecast already bakes in solid growth for 2023. For sales, we’re projecting over 3% growth compared with 2022, which assumes solid growth across Snap-on’s segments. We’re also expecting operating margins to hold up well, landing at 20.0%. Our margin estimate assumes the company starts to slow price increases.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on’s business continues to show solid performance, despite macroeconomic uncertainty globally. The company managed to grow fourth-quarter sales by 4% year on year to $1.1 billion. Revenue gains in the quarter were supported by solid growth in the tools segment (up over 7% year on year) as well as the repair systems and information business (up over 11% year on year). Operating margins (excluding financial services) expanded about 50 basis points to 21.5% in the quarter, thanks to increased sales volume and pricing, which helped offset elevated costs due to supply chain headwinds. We elected to leave our long-term assumptions largely intact following the earnings print. Our fair value estimate increased to $194 from $192, mainly due to the time value of money since our last update.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We believe Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We think Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

U.S. auto repair demand remained solid in the quarter, as autos continue to be affected by the chip shortage. Consumers have been forced to hang on to vehicles a lot longer than normal, evidenced by the high average fleet age of vehicles—over 12 years currently. As vehicles age, they require more repairs to stay on roadways. A key beneficiary of this trend has been narrow-moat Snap-on. In the quarter, the company reported sales of $1.1 billion, increasing 6% year over year. Gross profit declined about 190 basis points to 48.3%, mainly due to higher material costs. That said, solid pricing and volume growth slightly offset the dilutive impact of supply chain constraints.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We think Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.

Snap-on reported solid results to close out the first half of 2022. Management continued to be upbeat on the auto repair market on its second-quarter earnings call. Overall, we think the auto repair industry is set up for continued growth in the near term. Our confidence is underpinned by the constrained new vehicle market (still experiencing headwinds from the chip crunch). Consumers have had to either hold on to their existing vehicles or look for used vehicles. This backdrop has led to increasing demand for repair tools among auto technicians, a key driver for Snap-on’s results over the past couple of years.

Snap-on’s first-quarter results showed demand for automotive tools and software was strong. We raised our near-term sales and margin forecast to reflect growing vehicle repair demand. In 2022, we now expect sales to grow over 4% year on year to $4.4 billion, while we project operating margins to come in over 19%. As a result, our fair value estimate increased to $184 from $180 previously. That said, we still view Snap-on’s shares as overvalued, which currently trade approximately 22% above our fair value estimate.

Snap-on provides premium tools to vehicle repair shops and industrial customers. We think Snap-on will continue to be the top player in the tools industry. The company benefits from a strong brand reputation among repair technicians. Customers value Snap-on’s high-quality and strong performing products, in addition to its high-touch mobile van network. Snap-on’s tools and diagnostic products help customers complete repairs faster, improving productivity. We think customers will continue to pay up for Snap-on’s tool durability, convenience, and flexible financing options.