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A month has gone by since the last earnings report for Snap-On (SNA). Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Snap-On due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Snap-on Tops Earnings & Sales Estimates in Q4
Snap-on Incorporated posted solid fourth-quarter 2020 results wherein, both top and bottom lines increased year over year. Despite the tough COVID-19 environment, the company retained its positive sales momentum during the quarter.
Q4 in Detail
Snap-on’s adjusted earnings of $3.84 per share in fourth-quarter 2020 surpassed the Zacks Consensus Estimate of $2.95. Moreover, the figure was up 24% from the year-ago quarter’s adjusted earnings of $3.08 per share.
Net sales grew 12.5% to $1,074.4 million and beat the Zacks Consensus Estimate of $949 million. The uptick can be attributed to organic sales growth of 10.6%, a $9.6-million positive impact of foreign currency translations and $7.5 million in contributions from acquisitions.
Adjusted gross profit was $516.2 million, up 14.6% year over year, while gross margin advanced 80 basis points (bps) to 48% in the reported quarter.
Further, the company’s adjusted operating earnings before financial services totaled $216.2 million, up 26.1% year over year. Additionally, adjusted operating earnings margin expanded 820 bps to 20.1% in the quarter under review.
Segmental Details
Sales in Commercial & Industrial Group increased 3.3% from the prior-year quarter to $364.4 million, driven by a positive impact of $6.5 million from foreign currency and $7.5 million in gains from acquisition, which more than offset the organic sales decline of 0.7%. Solid volumes in the Europe-based hand tools business acted as an upside. On the flip side, the sales decline in critical industries and the Asia Pacific region hurt the segment to some extent.
The Tools Group segment’s sales rose 20.1% year over year to $494.4 million, driven by organic sales growth of 19.6% and a $2.2-million positive impact of foreign currency. Solid sales performance for both U.S. and international operations aided results.
Sales in Repair Systems & Information Group grew 7.8% year over year to $361.1 million. Moreover, organic sales in the segment rose 7% from the year-ago quarter with $2.4 million positive impact from foreign currency. Higher sales in OEM dealerships as well as strength in diagnostics and repair information products to independent repair shop owners and managers more than offset the softness in undercar equipment.
Nevertheless, the Financial Services business reported revenues of $93.4 million, up from $83.9 million in the year-ago quarter.