QUOTE AND NEWS
Market Intelligence Center  Dec 5  Comment 
For a hedged play on Snap-On Inc (SNA), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the Mar. '15 $135.00 covered call for a net debit in the $130.45 area. That is also the break-even stock price for the covered call....
Market Intelligence Center  Dec 2  Comment 
Option-trade picking algorithms patented by MarketIntelligenceCenter.com found a trading opportunity with Snap-On Inc (SNA) that should provide a 2.95% return in just 108 days. Sell one Mar. '15 call at the $130.00 level for each 100 shares of...
Benzinga  Dec 2  Comment 
In a report published Tuesday, Wunderlich Securities analyst Liam D. Burke reiterated a Buy rating on Snap-on (NYSE: SNA), and raised the price target from $140.00 to $160.00. In the report, Wunderlich Securities noted, “Snap-on's (SNA)...
Market Intelligence Center  Nov 10  Comment 
Option-trade picking algorithms patented by MarketIntelligenceCenter.com found a trading opportunity with Snap-On Inc (SNA) that should provide a 3.99% return in just 130 days. Sell one Mar. '15 call at the $135.00 level for each 100 shares of...
SeekingAlpha  Oct 16  Comment 
By SA Transcripts: Snap-on Incorporated (NYSE:SNA) Q3 2014 Results Earnings Conference Call October 16, 2014; 10:00 a.m. ET Executives Nick Pinchuk - Chief Executive Officer Aldo Pagliari - Chief Financial Officer Leslie Kratcoski...
newratings.com  Oct 16  Comment 
Forbes  Oct 15  Comment 
Optimism surrounds Snap-on, as it gets ready to report its third quarter results on Thursday, October 16, 2014. Analysts are expecting the company to book a profit of $1.61 a share, up from $1.43 a year ago.Over the past three months, the...
Benzinga  Oct 13  Comment 
Below are the top small tools & accessories stocks on the NYSE in terms of gross margin. The trailing-twelve-month gross margin at Snap-on (NYSE: SNA) is 48.20%. Snap-on's revenue for the same period is $3.16 billion. The trailing-twelve-month...
Benzinga  Oct 10  Comment 
In a report published Friday, Wunderlich Securities analyst Liam D. Burke reiterated a Buy rating and $140.00 price target on Snap-on Incorporated (NYSE: SNA). In the report, Wunderlich Securities noted, “Snap-on has a stated 4% to 6% annual...
Market Intelligence Center  Oct 10  Comment 
After Thursday’s trading in Snap-On Inc (SNA) the algorithms behind MarketIntelligenceCenter.com's Artifical Intelligence Center picked out a trade that offers a 2.50% or 12.83% (for comparison purposes only), while providing 4.75% downside...




 

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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