Snap-on Inc. SNA has reported mixed first-quarter 2024 results, wherein earnings beat the Zacks Consensus Estimate while sales missed the same. Further, earnings advanced year over year while sales declined. Results have benefited from the continued positive business momentum and contributions from the company’s Value Creation plan.

Snap-on’s earnings of $4.91 per share in first-quarter 2024surpassed the Zacks Consensus Estimate of $4.66. The figure also improved 6.7% from earnings of $4.60 per share in the year-ago quarter.

Net sales dipped 0.1% year over year to $1,182.3 million and missed the Zacks Consensus Estimate of $1,194 million. The decline can be attributed to an organic sales fall of 0.8%, partly offset by $6.7 million of acquisition-related sales and a $2.5 million positive impact of foreign currency translations.

This current Zacks Rank #2 (Buy) company’s shares have gained 13.8% in the past six months compared with the industry's 9.4% growth.

Q1 Highlights

The gross profit of $596.7 million improved 1.2% year over year while the gross margin expanded 70 basis points (bps) year over year to 50.5% in the reported quarter. We expected a gross margin of 49.4%, indicating a gross margin contraction of 40 bps for the first quarter.

Snap-on Incorporated Price and EPS Surprise Snap-On Incorporated Price and EPS Surprise

Snap-on Incorporated price-eps-surprise | Snap-on Incorporated Quote

The company’s operating earnings before financial services totaled $270.9 million, up 4% year over year. As a percentage of sales, operating earnings before financial services expanded 90 bps to 22.7% in the first quarter. Financial Services' operating earnings were $99.6 million in the quarter, up 7.6% year over year.

Consolidated operating earnings (including financial services) were $339.2 million, up 4% year over year. As a percentage of sales, operating earnings expanded 90 bps year over year to 26.5%.

Segmental Details

Sales in the Commercial & Industrial Group slipped 1.1% from the year-ago quarter to $359.9 million on an organic sales drop of 2.5%. Net sales were aided by $6.7 million of acquisition-related sales and partly by $1.4 million of unfavorable currency translations. Organic sales fell in both the segment’s power tools and Asia-Pacific operations, partly offset by increased customer activity in critical industries. For the quarter, we expected sales of $368.4 million from the segment.

The Tools Group segment’s sales declined 6.9% year over year to $500.1 million, which missed our estimate of $531.2 million. The dip was led by an organic sales decline of 7%, partly offset by a $0.6 million positive impact of foreign currency. Organic sales declined 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 advanced 3.9% year over year to $463.8 million, with organic sales growth of 3.3%. Sales also gained from a $2.5 million positive impact of currency. Higher activity with OEM dealerships and a rise in sales of under-car equipment contributed to the segment’s organic sales growth. Our estimate for sales from this segment was $455.4 million in the quarter.

The Financial Services business’ revenues rose 7.6% year over year to $99.6 million in the quarter. Our estimate for sales from this segment was $97.3 million in the quarter.



Financials

As of Mar 30, 2024, Snap-on’s cash and cash equivalents totaled $1.12 billion, with shareholders’ equity (before non-controlling interest) of $5.1 billion. The company expects capital expenditures of $100-$110 million in 2024.

Looking Ahead

Management believes that the company’s markets and operations have considerable resilience against the uncertainties of the environment. In 2024, the company anticipates progress along its defined runways for growth. Management expects 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. As a result, capital expenditure for 2024 is projected to be $100-$110 million. The company expects an effective tax rate of 22-23% for 2024.

Other Stocks to Consider

Some better-ranked companies are GIII Apparel GIII, lululemon athletica LULU and Royal Caribbean RCL.

GIII Apparel, an accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. GIII has a trailing four-quarter earnings surprise of 547.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales suggests growth of 3.7% from the year-ago figure.

lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2, at present.

The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and earnings per share (EPS) suggests growth of 11.9% and 10.8%, respectively, from the year-ago figures. LULU has a trailing four-quarter earnings surprise of 9.7%, on average.

Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.

The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 14.7% and 47.9%, respectively, from the year-ago reported levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Royal Caribbean Cruises Ltd. (RCL):Free Stock Analysis Report

Snap-On Incorporated (SNA):Free Stock Analysis Report

lululemon athletica inc. (LULU):Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII):Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research