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Snap-on Incorporated (NYSE:SNA) saw significant share price movement during recent months on the NYSE, rising to highs of US$359 and falling to the lows of US$324. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Snap-on's current trading price of US$328 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Snap-on’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Snap-on Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 11% below our intrinsic value, which means if you buy Snap-on today, you’d be paying a fair price for it. And if you believe that the stock is really worth $368.48, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Snap-on’s share price may be more stable over time (relative to the market), as indicated by its low beta.
See our latest analysis for Snap-on
What kind of growth will Snap-on generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Snap-on, it is expected to deliver a relatively unexciting earnings growth of 9.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? SNA’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on SNA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.