Snap-on's Growth Strategies & Business Model Aid: What's Next?
Snap-on Incorporated SNA has been progressing well in its strategic efforts. The company has been enhancing the franchise network, improving relationships with repair shop owners and managers, and expanding into critical industries in emerging markets.
Management’s emphasis on the Rapid Continuous Improvement (RCI) process has been on track.
SNA’s Growth Efforts on Track
The RCI process is aimed at enhancing organizational effectiveness, reducing costs and boosting sales and margins. Savings from this initiative come from continuous productivity and process-improvement plans.
Management intends to boost customer services, along with enhancing manufacturing and supply-chain capabilities, through the RCI initiatives and further investments. Snap-on’s ability to innovate bodes well too. SNA is dedicated to various strategic principles and processes aimed at creating values.
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The company has been investing in bringing new products and increasing brand awareness across the world. Additionally, SNA’s robust business model helps enhance value-creation processes, which, in turn, improves safety, quality of service, customer satisfaction and innovation.
Snap-on’s Struggles
Despite these positives, Snap-on battles with a tough macroeconomic landscape, including inflationary pressures and other headwinds. Delayed financial recovery in China is acting as a deterrent.
Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind that is hurting SNA’s performance.
Conclusion
Nevertheless, management expects continued progress by leveraging capabilities in the automotive repair arena, as well as expanding its customer base in automotive repair and across geographies, including critical industries. The company believes that its markets and operations have considerable resilience against the uncertainties of the environment. As a result, Snap-on anticipates progress along its defined runways for growth.
Analysts seem optimistic about the company. The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is currently pegged at $19.24 and $19.85, respectively, indicating growth of 2.6% and 3.2%.
Buoyed by such catalysts, shares of this Zacks Rank #3 (Hold) company have gained 12.2% compared with the industry’s 5.1% growth in the past three months.
Key Consumer Discretionary Picks
We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Crocs CROX and Royal Caribbean RCL.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago levels.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Snap-On Incorporated (SNA) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report