Snap-on (SNA – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Elizabeth Lane Suzuki from Bank of America Securities remains neutral on the stock and has a $240.00 price target.
Elizabeth Lane Suzuki’s Sell rating for Snap-on (SNA) is attributed to a combination of factors. Firstly, Suzuki maintains her price objective for the company at $240, based on a P/E ratio of approximately 13x for 2024E. This is a slight discount to the company’s historical average P/E, which she believes is justified due to slowing tailwinds in the automotive aftermarket and worsening economic and credit conditions. Moreover, Snap-on’s 3Q EBIT fell short of expectations, despite sales being slightly above estimates.
Suzuki also highlights that while the Tools segment and Repair Systems & Information (RS&I) reported YoY sales growth in 3Q, there is observable moderation in the automotive aftermarket, especially as used vehicle values continue to decline. In addition, the Commercial & Industrial (C&I) segment, despite showing YoY EBIT margin improvement, is believed to be capped in terms of growth due to its cyclical nature and the weak economic growth. Finally, the Financial Services segment, despite growing 8.7% YoY, is expected to be impacted by tightening credit conditions, which would lead to higher rates and less demand for high-ticket products. This combination of factors led Suzuki to reiterate her Underperform rating for Snap-on.
According to TipRanks, Lane Suzuki is an analyst with an average return of -1.0% and a 45.21% success rate. Lane Suzuki covers the Consumer Cyclical sector, focusing on stocks such as Advance Auto Parts, Lowe’s, and Driven Brands Holdings.
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Snap-on (SNA) Company Description:
Snap-On, Inc. engages in the manufacture and marketing of tools, equipment, diagnostics, repair information, and systems solutions for professional users performing critical tasks. Its Products and services include hand and power tools, tool storage, diagnostics software, handheld and PC-based diagnostic products, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, such as aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education. It operates through following segments: Commercial and Industrial Group; Snap-On Tools Group; Repair Systems and Information Group; and Financial Services. The Commercial and Industrial Group segment consists of business operations that serve the aerospace, natural resources, government, power generation, transportation and technical education markets. The Snap-On Tools Group segment includes business operations primarily serving vehicle service and repair technicians through worldwide mobile tool distribution channel. The Repair System and Information Group segment serves other professionals vehicle repair customers, primarily owners and managers of independent repair shops and original equipment manufacturer dealerships through direct and distributor channels. The Financial Services segment comprises of installment sales and lease contracts arising from franchisees’ customers, and business loans and vehicle leases to franchisees. The company was founded by Joseph Johnson and William Seidemann in 1920 and is headquartered in Kenosha, WI.
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