| Some of the most highly regarded tools manufactured today are made by Snap=On Incorporated. They are also some of the most expensive tools made, and they're often the most desired tools on the worksite. The company has also been increasing it's dividend these last few years as revenue and earnings continue to steadily increase. |  Snap-On Dividend Chart |
Snap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. The company operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments. It offers hand tools, such as wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools, torque measuring instruments, and other products; power tools, such as cordless, pneumatic, hydraulic, and corded tools comprising impact wrenches, ratchets, screwdrivers, drills, sanders, grinders, and related products; and tool storage products comprising tool chests, roll cabinets, and other products. The company also provides handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics. In addition, it offers solutions for diagnosis and service of vehicles and industrial equipment for various products, such as wheel alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane systems, collision repair equipment, air conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment, safety testing equipment, battery chargers, and hoists. Further, the company provides financing programs to facilitate the sales of its products. It serves aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation, and technical education industries, as well as vehicle dealerships and repair centers. The company was founded in 1920 and is headquartered in Kenosha, Wisconsin.
(Summary) (Company) (Chart)
(Summary) (Company) (Chart)
| 12 September 2016 Price $147.78 1yr Target $174.67 Analysts 6 Dividend $2.44 Payout Ratio 27.98% 1yr Cap Gain 18.19% Yield 1.65% 1yr Tot Return 19.84% P/E 16.95 PEG 1.70 Beta 1.23 | EPS (ttm) $8.72 EPS next yr $9.96 Forward P/E 14.84 EPS next 5yr 10.00% 1yr Price Support $99.60 Market Cap $8.80 Bil Revenues $3.64 Bil Earnings $516.60 Mil Profit Margin 14.17% Quick Ratio 1.60 Current Ratio 2.20 Debt/Equity 0.34 | 1yr RevGR 2.89% 3yr RevGR 5.00% 5yr RevGR 6.03% 1yr EarnGR 13.44% 3yr EarnGR 15.74% 5yr EarnGR 20.48% 1yr DivGR 23.24% 3yr DivGR 16.37% 5yr DivGR 12.95% ROA 11.60% ROE 20.90% |
Background
Snap-on was founded as the Snap-on Wrench Company in Milwaukee, Wisconsin in 1920 by Joseph Johnson and William Seidemann. As a new socket wrench manufacturing company, the business manufactured and marketed ten sockets that would "snap on" to five interchangeable handles. Their slogan was "15 do the job of 50"
After World War II, Palmer advertised for a military officer to organize and develop a larger sales force for the expected post-war sales boom. Newton Tarble was hired, and came up with the idea of developing routes for company dealers to see mechanics on a weekly basis. Eventually these salesmen became independent businessmen and authorized dealers using larger walk-in vans to carry a growing product line. Thus, Snap-on tools are sold only by dealers and none are sold in retail stores.
The quality of the company's tools are highly regarded but their prices are also among the very highest. Snap-on currently operates plants in various states and cities such as Milwaukee, Wisconsin and Elizabethton, Tennessee, which manufacture hand tools. Pneumatic tools are currently manufactured in Murphy, North Carolina.
In 1975, Snap-on opened a manufacturing plant in Johnson City, Tennessee and closed the plant 32 years later in 2007. The Murphy, North Carolina plant was named as one of the top 10 plants in North America by Industry Week.
In 1999, Snap-on acquired Bahco, a Swedish hand tool brand. Bahco hand tools are designed and manufactured by SNA Europe, the European manufacturing subsidiary of Snap-on Incorporated.
Sales Philosophy and Product Categories
Snap-on has always maintained the philosophy that the customer's time was too valuable to spend going shopping for tools. Snap-on Franchisees visit their customers in their place of work weekly, in a van loaded with items for purchase. Purchase options range from Collect on Delivery, to a revolving account in which a customer pays a set portion of his balance weekly, to an extended credit program sponsored by Snap-on Credit for large purchases.
Recently, Snap-on has made other advances in their product showcasing. Newest among these are the Snap-on TechKnow Express, showcasing everything Snap-on has to offer in the realm of Diagnostic equipment, and the Rock 'n Roll Cab Express, a truck with various types of tool storage showing customization options, including units larger than what would fit on a standard Franchisee van. These trucks are typically assigned to a particular region and work within that region with individual Franchisees.
Snap-on produces hand, air, and electric tools designed for professional use in all facets of the transportation industry. Automotive, heavy-duty, equipment, marine, aviation, and railroad industries all are customers of Snap-on. Snap-on also distributes hand tools and power tools under the brand name Blue-Point, as an entry-level or price-conscious offering.
Snap-on also manufactures tool storage cabinets in its Algona, Iowa plant. Snap-on produces hand-held electronic diagnostic tools for the on-board computer systems used in most modern cars and heavy-duty vehicles, as well as automotive emissions control diagnostics equipment in its San Jose, CA diagnostic facility. Snap-on diagnostic products are sold in Europe and Brazil under the name Sun.
Snap-on has always maintained the philosophy that the customer's time was too valuable to spend going shopping for tools. Snap-on Franchisees visit their customers in their place of work weekly, in a van loaded with items for purchase. Purchase options range from Collect on Delivery, to a revolving account in which a customer pays a set portion of his balance weekly, to an extended credit program sponsored by Snap-on Credit for large purchases.
Recently, Snap-on has made other advances in their product showcasing. Newest among these are the Snap-on TechKnow Express, showcasing everything Snap-on has to offer in the realm of Diagnostic equipment, and the Rock 'n Roll Cab Express, a truck with various types of tool storage showing customization options, including units larger than what would fit on a standard Franchisee van. These trucks are typically assigned to a particular region and work within that region with individual Franchisees.
Snap-on produces hand, air, and electric tools designed for professional use in all facets of the transportation industry. Automotive, heavy-duty, equipment, marine, aviation, and railroad industries all are customers of Snap-on. Snap-on also distributes hand tools and power tools under the brand name Blue-Point, as an entry-level or price-conscious offering.
Snap-on also manufactures tool storage cabinets in its Algona, Iowa plant. Snap-on produces hand-held electronic diagnostic tools for the on-board computer systems used in most modern cars and heavy-duty vehicles, as well as automotive emissions control diagnostics equipment in its San Jose, CA diagnostic facility. Snap-on diagnostic products are sold in Europe and Brazil under the name Sun.
My Perspective
I like this company and I believe it's currently priced at about where it should be when considering its inherent fair value. But it could be considered priced a little too high based on its forward earnings growth estimates. Therefore I would be looking at starting a position in this company at a price anywhere below $140 per share. That price level would provide me with some insurance against a P/E ratio that could find it self falling toward its long term estimated earnings growth rate of just 10%.
I also like the fact that the company has doubled their dividend over the last five years. With a payout ratio of less than 30%, the dividend could easily increase at a rate faster that the company's earnings increases without jeopardizing the company's financials. And I like increasing dividends a lot!
I like this company and I believe it's currently priced at about where it should be when considering its inherent fair value. But it could be considered priced a little too high based on its forward earnings growth estimates. Therefore I would be looking at starting a position in this company at a price anywhere below $140 per share. That price level would provide me with some insurance against a P/E ratio that could find it self falling toward its long term estimated earnings growth rate of just 10%.
I also like the fact that the company has doubled their dividend over the last five years. With a payout ratio of less than 30%, the dividend could easily increase at a rate faster that the company's earnings increases without jeopardizing the company's financials. And I like increasing dividends a lot!
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