QUOTE AND NEWS
DailyFinance  Aug 7  Comment 
The Snap-on Incorporated (NYSE: SNA) board of directors declared today a quarterly common stock dividend of $0.44 per share payable September 10, 2014 to shareholders of record on August 25, 2014. Snap-on has paid consecutive...
Market Intelligence Center  Aug 4  Comment 
For a hedged play on Snap-On Inc (SNA), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the Dec. '14 $115.00 covered call for a net debit in the $112.35 area. That is also the break-even stock price for the covered call....
Forbes  Jul 25  Comment 
As the saying goes, there are many possible reasons for an insider to sell a stock, but only one reason to buy -- they expect to make money.  So let's look at one noteworthy recent insider buy.
StreetInsider.com  Jul 22  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Management+Changes/Snap-On+%28SNA%29+Names+Former+Exelon+Executive+as+Director/9678353.html for the full story.
Market Intelligence Center  Jul 21  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered-call trade on Snap-On Inc (SNA) that includes 5.82% downside protection. Sell one contract of the Dec....
TheStreet.com  Jul 18  Comment 
NEW YORK (Real Money) -- Why did Snap-on , the ancient tool workhorse, rally four points to an all-time high in yesterday's hideous session? What makes a stock totally buck the entire market and end up positive when so many others that reported...
TheStreet.com  Jul 18  Comment 
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- Here are some of the hot stocks Jim Cramer talked about on Thursday's Mad Money on CNBC: CHS data by...
SeekingAlpha  Jul 17  Comment 
Snap-on Incorporated (NYSE:SNA) Q2 2014 Earnings Call July 17, 2014 10:00 am ET Executives Leslie H. Kratcoski - Vice President of Investor Relations Nicholas T. Pinchuk - Chairman, Chief Executive Officer and President Aldo J....
TheStreet.com  Jul 17  Comment 
NEW YORK (TheStreet) -- Shares of Snap-On Inc.  are higher by 3.49% to $123.19 on heavy volume in mid-morning trading on Thursday following the company's 2014 second quarter earnings report, which showed an increase in net earnings to $106.1...
MarketWatch  Jul 17  Comment 
Snap-on Inc. rallied Thursday to top the S&P 500 after the toolmaker reported better-than-expected financial results. Snap-on reported its second-quarter earnings rose to $106.1 million, or $1.80 a share, from $88.4 million, or $1.50 a share, a...




 

Snap-On Incorporated (NYSE: SNA) is a global leader in manufacturing and selling of hand tools and equipment, and has operations in over 130 countries worldwide.[1] SNA won Best Hand Tools, Best Power Tools, Best Tool Storage, and Best Scan Tools in the 2008 Frost & Sullivan Technician’s Choice Awards.[2]

In the small tools & accessories industry, SNA competes against Stanley Works (SWK), Danaher (DHR), and Black & Decker (BDK). Some small tools companies have struggled recently. The recession caused a drop in Do-It-Yourself tool sales, while the weak U.S. Housing Market caused a drop in construction tool sales. Over 70% of SNA's sales come from professional automotive repair, so the company has experienced less hardship than its competitors. In 2008, SNA acquired a 60% share in the Chinese tool manufacturer Zhejiang Wanda Tools and plans to further invest in China, India, and Eastern Europe.[3] Also in 2008, the company installed the Rapid Continuous Improvement (RCI) manufacturing process to eliminate waste and cut costs. Reknowned for its use at Toyota Motor (TM), the RCI system saved SNA $30 million.[3]

Company Overview

Business Financials

In 2009, SNA earned a total of $2.42 billion in 2009. This was a decrease from its 2008 total revenues of $2.93 billion. This had a negative impact on SNA's net income. Between 2008 and 2009, SNA's net income declined from $237 million in 2008 to $144 million in 2009.

Business Segments

Snap-On operates in three main business segments:

Equipment (20.9% of 2009 revenues)[4]

The Commercial & Industrial Group consists of the business operations providing tools and equipment products and equipment repair services to industrial and commercial customers. This group's main end markets are the automotive industry and industrial business. To get away from the weak U.S. Economy, this group plans to invest in emerging market growth initiatives, including China, India and Eastern Europe.

Snap-on Tools Group (55.5% of 2009 revenues)[4]

SNA's Tools Group sells hand tools, power tools, and tool storage products. Hand tools range from screwdrivers to cutting tools, power tools range from drills to sanders, and tool storage products range from tool chests to cabinets. Particularly, sales to U.S. franchisees declined due to a harsher economic climate.

Diagnostics & Information Group (23.6% of 2009 revenues)[4]

The Diagnostics & Information Group consists of the business operations providing diagnostics equipment, vehicle service information, business management systems, electronic parts catalogs, and other instruction manuals for the automobile industry. Over 38,000 automotive dealerships use SNA's electronic parts catalogues.

Trends and Forces

SNA avoids U.S. Do-It-Yourself (DIY) market risk with its robust Professional Auto Repair end market.

In the small tools & accessories industry, there are two categories of consumers: industry professionals such as auto mechanics and construction workers, and Do-It-Yourself (DIY) consumers. The DIY business has been declining since 2008 due to the recession, as the average consumer is not willing to purchase items for hobbies.[3] Over 70% of SNA's sales go to the automotive industry, but its products are mainly sold to professionals, ranging from neighborhood auto mechanics to NASCAR mechanics. Furthermore, SNA owns half of the market share for the professional tools business.[3] Even in a rough economy, living with a broken-down car is hard, almost impossible for some Americans. Thus, Americans still need to get their cars repaired, and the professional auto repair industry has been minimally affected by the recession.

SNA Installed Cost-Cutting Program to Balance Fluctuating Commodities Prices

Steel and oil are vital commodities used in Snap-On's product manufacturing, so price fluctuations in these commodities will have a dynamic impact on SNA operating margins. Volatile commodity prices brings uncertainty to SNA's annual costs, so the company installed a cost-cutting manufacturing process in 2008. SNA installed the Rapid Continuous Improvement (RCI) processes to manufacture its products more efficiently -- eliminating waste and cutting costs. RCI is based on the Japanese business method Kaizen, which is renowned for being used by Toyota Motor (TM). Kaizen includes defining the problem, choosing the best people, and correcting the problem in one week or less using Kaizen tools and techniques, such as doing small experiments to test procedure efficiency.[5] RCI helped SNA cut its operating expenses by $30 million in 2008.

SNA acquires Zhejiang Wanda Tools to expand internationally.

In March of 2008, SNA acquired a 60% share in the Chinese tool manufacturer Zhejiang Wanda Tools for $16.4 million.[6] Snap-on also has manufacturing facilities in Kunshan and Xiaoshan, China.[7] The acquisition is part of the company's plan to grow in emerging markets and low-cost environments. With poor U.S. economic conditions, SNA wants to improve business in countries that have booming populations and more economic optimism. In 2009, SNA continued to invest overseas, particularly in China, India, and Eastern Europe.[3]

Competition

Small Tools & Accessories

  • Stanley Works (SWK): Like SNA, SWK manufactures a line of DIY and industrial tools. SWK has seen share price drop 50% due to sluggish 2009 DIY market.[8]
  • Danaher (DHR): DHR manufactures Sears Holdings (SHLD)' Craftsman tools line, which competes with SNA's hand and power tools line. Other than SWK, DHR is the only producer of a complete consumer hand-tools line.[9]
  • Black & Decker (BDK): BDK produces power tools, hardware and home improvement products, and fastening systems. BDK competes with SNA in power tools and home improvement products.[10]

Notes

  1. SNA 10-K 2009 Item 1 Pg. 4
  2. Auto Spectator, "Snap-on Recognized by Frost & Sullivan as Leader in US Automotive Technicians' Choice Survey"
  3. 3.0 3.1 3.2 3.3 3.4 SNA 2008 Annual Report
  4. 4.0 4.1 4.2 SNA 10-K 2009 Item 1 Pg. 5
  5. Kaizen website, "About us"
  6. Investing Minds, "Snap On"
  7. Business Wire, "Snap-on Announces First Quarter 2008 Results"
  8. Investopedia, "Stanley Works Needs Work," 03/17/09
  9. Danaher Website, "About"
  10. Black & Decker website, "Corporate Profile"
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