Snap-on Inc. SNA is scheduled to report fourth-quarter 2018 results on Feb 7, before the opening bell.
Notably, the company delivered a positive earnings surprise in each of the trailing four quarters, the average being 2.5%.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.03, reflecting an improvement of 12.6% year over year. Estimates have been stable over the past 30 days. For revenues, the consensus mark stands at $963.1 million, mirroring a 1.2% decline from the year-ago period.
In the past three months, shares of Snap-on have gained 6.6% compared with the industry’s 3.5% growth.
Let’s See How Things Are Shaping Prior to 4Q18
Snap-on’s robust business model helps in enhancing the value-creation processes. Moreover, the company’s efforts toward product innovation bode well, which are significantly contributing to its performance. Its growth strategy focuses on three critical areas, namely enhancing the franchise network; improving relationship with repair shop owners and managers; and expanding major industries in emerging markets.
Snap-on’s Rapid Continuous Improvement (RCI) program appear encouraging as well. It is designed to enhance organizational effectiveness and minimize costs, and generate savings. Management intends to boost customer services as well as improve manufacturing and supply chain capabilities through the RCI initiatives and further investments. Furthermore, Snap-on remains focused on acquisitions to strengthen its portfolio. In third-quarter 2018, sales generated from acquisitions totaled $1.4 million, including Norbar operations and FASTORQ business.
We expect all the aforementioned initiatives to aid Snap-on’s top- and bottom-line performance in the to-be-reported quarter. Additionally, the company expects to leverage its capabilities in the automotive repair area besides strengthening its overall professional customer base. For 2018, Snap-on expects to incur capital expenditures in the band of $90-$100 million, of which $68.6 million was spent in the first nine months of the year.
However, the company has been witnessing softness across its Tools Group segment over the past few quarters due to lower sales at its international franchise business. This might remain a concern in the fourth quarter as well. Volatility in raw material prices and stiff competition are additional headwinds.
Zacks Model
Our proven model does not conclusively show that Snap-on is likely to beat earnings estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Snap-on Incorporated Price and EPS Surprise
Snap-on Incorporated Price and EPS Surprise | Snap-on Incorporated Quote
Snap-on has an Earnings ESP of -0.17% and a Zacks Rank #3, which make surprise prediction difficult.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Planet Fitness, Inc. PLNT has an Earnings ESP of +5.65% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Roku, Inc. ROKU has an Earnings ESP of +16.67% and a Zacks Rank of 3.
Zynga Inc. ZNGA has an Earnings ESP of +2.86% and a Zacks Rank #3.
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