Snap-on Inc. SNA has reported fourth-quarter 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Moreover, revenues and earnings increased from the year-ago period. Results have improved due to strong balance and overall progress, driven by operations serving critical industries and repair shop owners achieving growth in sales and profitability. Meanwhile, the Snap-on Tools Group continued to close the gap from previous periods despite broader market uncertainty.

Snap-on’s earnings of $4.82 per share beat the Zacks Consensus Estimate of $4.80. The figure improved 1.5% from earnings of $4.75 in the year-ago quarter.

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Despite the strong results, shares of Snap-on declined 3.8% in the pre-market trading session. The decrease in the share price can be attributed to continued softness in the Tools Group segment, led by lower activity in the U.S. operations, which partly hurt the sales performance. The Zacks Rank #3 (Hold) company’s shares have gained 32.3% in the past six months compared with the industry's 17% growth.

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SNA’s Quarterly Performance: Key Metrics & Insights

Net sales rose 0.2% year over year to $1.199 billion and surpassed the Zacks Consensus Estimate of $1.189 billion. The increase was due to a 0.2% increase in organic sales and $2.1 million from acquisition-related sales, partly mitigated by $2 million from unfavorable foreign currency translation.

The gross profit of $596.1 million rose 3.2% year over year, whereas the gross margin expanded 140 basis points (bps) year over year to 49.7%. We expected a gross margin of 49.1%, up 80 bps from the year-ago quarter.
 
The company’s operating earnings before financial services totaled $265.2 million, up 2.8% year over year. As a percentage of sales, operating earnings before financial services expanded 50 bps to 22.1% in the fourth quarter. Financial Services unit's operating earnings were $66.7 million, down 1.8% year over year.

Consolidated operating earnings (including financial services) were $331.9 million, up 1.9% year over year. As a percentage of sales, operating earnings expanded 30 bps year over year to 25.5%.

Snap-on’s Segmental Analysis

Sales in the Commercial & Industrial Group improved 4.2% from the year-ago quarter to $379.2 million, driven by a 3.9% rise in organic sales. Net sales were also aided by $2.1 million of acquisition-related sales, partly offset by a $1-million impact of unfavorable currency translations. Organic sales growth was driven by higher sales to customers in critical industries, with progress in the specialty torque arena. For the quarter, we expected sales of $365.4 million for the segment.

The Tools Group segment’s sales declined 1.3% year over year to $506.6 million. We estimated sales of $501.5 million for the segment. The dip resulted from an organic sales decline of 1.4%, partly offset by a $0.6-million positive impact of foreign currency. Organic sales decreased 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 improved 1.3% year over year to $456.6 million, with organic sales growth of 1.6%, offset by unfavorable currency impacts of $1.5 million. Organic sales grew due to increased activity with OEM dealerships, and higher sales of diagnostic and repair information products to independent repair shops, though partially offset by lower undercar equipment volumes. Our estimate for sales from this segment was $450.8 million.

The Financial Services business’ revenues rose 3.4% year over year to $100.5 million. Our estimate for sales from this segment was $101.3 million.

SNA's Financial Snapshot

Snap-on ended 2024 with cash and cash equivalents of $1.36 billion, with shareholders’ equity (before non-controlling interest) of $5.4 billion. The company expects a capital expenditure of $100 million for 2025.

What’s Ahead for Snap-on?

Management expects SNA’s markets and operations to have considerable resilience against the uncertainties of the operating landscape. For 2025, SNA anticipates progress along its defined runways for growth.

Management anticipates 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 of 22-23% for 2025.

Key Picks

We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Carnival Corp. CCL 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 has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

G-III Apparel has a trailing four-quarter earnings surprise of 113.4%, on average. The Zacks Consensus Estimate for GIII’s current financial-year sales and earnings per share (EPS) indicates growth of 1.7% and 3%, respectively, from the year-ago reported figures.

Carnival Corp operates as a cruise and vacation company. It carries a Zacks Rank #2 at present. CCL has a trailing four-quarter earnings surprise of 326.4%, on average.

The Zacks Consensus Estimate for CCL’s 2024 sales and EPS indicates increases of 4% and 24.7%, respectively, from the year-ago reported levels.

lululemon is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 at present. It has a trailing four-quarter earnings surprise of 6.7%, on average.

The Zacks Consensus Estimate for lululemon’s current financial-year sales and EPS indicates growth of 9.7% and 12.5%, respectively, from the year-ago reported figures.

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