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Snap-on Inc SNA

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Snap-on Starts the Year Off With a Solid Quarter, Continuing Momentum From the Second Half of 2020

Analyst Note

| Brian Bernard, CFA, CPA |

Snap-on reported first-quarter results above our expectations, leading us to raise our fair value estimate to $156 from $151. We’ve increased our revenue and margin assumptions in the near term. For 2021, we project revenue to increase 5.6% year over year, with operating margins reaching 18.3%, benefiting from the strengthening auto repair market. Looking at the quarter, sales increased 20.2% year over year to $1.02 billion, largely driven by organic growth (up 16.3% year over year). We continue to be encouraged by the company’s consistent growth over the past few quarters, following the pandemic lows in the second quarter of 2020.

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Company Profile

Business Description

Snap-on is a manufacturer of premium tools and software for professional technicians. Hand tools are sold through franchisee-operated mobile vans that serve auto technicians who purchase tools at their own expense. A unique element of its business model is that franchisees bear significant risk, as they must invest as much as $375,000 in the van, inventory, and software. At the same time, franchisees extend personal credit directly to technicians on an individual tool basis. Snap-on currently operates three segments—repair systems and information, commercial and industrial, and tools—which accounted for 30%, 30%, and 40%, respectively, of its $3.6 billion 2020 manufacturing revenue. Its financing arm generates 9% of consolidated revenue and 26% of operating income.

2801 80th Street
Kenosha, WI, 53143
T +1 262 656-5200
Sector Industrials
Industry Tools & Accessories
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 12,300