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Snap-on's shares will reach $172 by 09.13.2015
14 august 2015

Snap-on Incorporated (SNA), a US manufacturer of tools and equipment for car service centers, continues to deliver double-digit growth. According to the recently released report for Q2 2015, revenue rose by 3.1% y-o-y to USD 851.8 mn, matching expectations. Meanwhile, organic revenue growth, which does not include the effects of the M&A transactions and currency fluctuations, amounted to 8.4%. All business units of the company demonstrated improved results, Snap-on Tools Group became revenue growth driver with revenue increasing by 8% to USD 398.7 mn and double-digit organic growth.

Operating profit was up 9.2% y-o-y to USD 150.8 mn, while operating margin climbed 1 pp to 17.7%. Effective income tax rate was 32% compared to 32.9% in 2014. Adjusted EPS jumped 12.8% y-o-y to USD 2.03, outstripping the consensus of USD 1.97.

Snap-on plans to continue to implement initiatives to support sustainable business growth in the coming quarters. These initiatives include further expansion of the market share of equipment for repair and diagnostics of cars, growth of franchises network, as well as expansion into new market segments and emerging markets. The company plans to spend USD 80-90 mn of capital investments for this purpose in 2015. As part of this strategy, the company recently acquired Ecotechnics, an Italian manufacturer of equipment for servicing of automobile air conditioners, for USD 13 mn. In addition, Snap-on expects effective income tax rate to be at the level of 2014 or lower in 2015.

We are still upbeat about mid-term prospects of the company and leave target price of the name unchanged at USD 175. The short-term technical target is USD 172.

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Snap-on's shares will reach $172 by 09.13.2015

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