Snap-On Incorporated SNA is trading at a notably low price-to-earnings (P/E) multiple, below the Zacks Tools Handheld industry and broader Consumer Discretionary averages. SNA's forward 12-month P/E ratio is 17.16X, lower than the industry average of 17.47X and the sector average of 18.97X.

SNA Stock P/E Performance

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The stock is undervalued compared with its industry peers, offering compelling value to investors looking for exposure to the retail apparel sector.

SNA has gained 35.4% in the past six months, outperforming the industry’s 16.8% increase. Its strategic approach, including the Rapid Continuous Improvement (RCI) process and cost-reduction initiatives, has helped the company outperform the broader sector and the S&P 500, which grew 17.2% and 10%, respectively, in the same period.

SNA Price Performance in Past Six Month

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Strategic Priorities and Value-Creation Initiatives Drive SNA's Growth

Snap-on’s robust business model helps in enhancing value-creation processes, which in turn improves safety, quality of service, customer satisfaction and innovation. The company’s growth strategy focuses on three critical areas, namely enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding critical industries in emerging markets.

Snap-on is committed to strategic principles such as RCI, which aims to enhance organizational efficiency, reduce costs, and improve sales, margins and productivity. RCI initiatives help generate savings through continuous process improvements. Additionally, Snap-on is investing in new products and brand awareness globally, alongside enhancing customer service and supply chain capabilities.

Snap-on’s business has shown strong performance, particularly in the third quarter of 2024, with solid growth in the automotive repair sector. As vehicle complexity increases with new models featuring advanced drivetrains, motor configurations and high-tech electrical systems, Snap-on has adapted by expanding its offerings to meet these challenges.

The company has focused on infrastructure investments, such as renovating bays and upgrading repair equipment, to accommodate the rising demands of repairing newer, more complex vehicles. While Europe showed mixed results regionally, with the Southern region remaining strong, Asia, particularly Korea and Japan, has demonstrated resilience in its markets.

SNA’s Strong Outlook

Snap-on continues investing in the tools and equipment. This will expand the capabilities to support the influx of new models and the complexity of repair. Snap-on’s RS&I Group has expanded its reach into OEM dealership programs and reinforced its position across the independent garages. Thus, the possibility with the repair shop owners and managers remains solid, and the company is well poised to grab such opportunities.

The Tools Group is focused on product development, manufacturing changes and selling efforts in the near term. The critical industries remain robust and have various opportunities. Torque also continues to rise in importance with critical industry customers. The company’s industrial division has been doing well, with an upward trajectory and robust profitability catering to the growing demand for customized solutions. Such strengths are likely to bolster sales and profits.

Management expects the company’s markets and operations to have considerable resilience against the uncertainties of the operating landscape. For the rest of 2024, SNA anticipates progress along its defined runways for growth. SNA expects continued progress by leveraging capabilities in the automotive repair arena and expanding its customer base in automotive repair and across geographies, including critical industries.

Investment Opinion on SNA Stock

Snap-on's impressive stock rally is driven by its Value-Creation Initiatives, service quality, customer satisfaction and innovation. These efforts position the company well for achieving long-term growth. With its strong performance, Snap-on holds a Zacks Rank #2 (Buy), reflecting its promising market outlook.

Three Stocks Showing Potential

Some other top-ranked stocks are Wolverine World Wide WWW, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.

Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures. The consensus mark for EPS reflects significant growth to 89 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 17.03%, on average.

Gildan Activewear manufactures and sells various apparel products in the United States, North America, Europe, the Asia Pacific and Latin America. It carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

The consensus estimate for Gildan Activewear’s current financial year sales and earnings indicates advancements of 1.5% and 15.6%, respectively, from the prior-year figures.

Steven Madden designs, sources, markets and sells fashion-forward, name-brand and private-label footwear. It currently has a Zacks Rank #2.

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.

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

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