SNA - Snap-on -Four out of five covering analysts hiked full-year 2008 earnings forecasts

Snap-on, Inc. (SNA), which is trading very close to a 52-week high, declared a quarterly dividend of 30 cents per share in late April. The company's dividend yield of 2.0% sits well above the industry average of 0.7%. Prior to declaring a dividend, this solid Growth & Income pick announced a robust first quarter with higher earnings and sales, which included 44% of the sales from outside the United States. SNA said it expects full year 2008 sales and earnings to exceed 2007 levels. Wall Street is also bullish on the company's future, pegging current full-year 2008 earnings forecasts at $3.93 per share, versus last month’s $3.72.

Full Analysis

Snap-on, Inc. manufactures and markets tools, diagnostics, equipment, software and service solutions for professional users. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as customers in industry, government, agriculture, aviation and natural resources.

Income

The company declared a quarterly dividend of 30 cents per share in late April. The dividend is payable on June 9, 2008 to shareholders of record on May 19, 2008. Snap-on noted that it has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. SNA’s dividend yield of 2.0% sits well above the industry average of 0.7%.

Growth

In late April, the tool maker put up solid numbers for the first quarter, which helped bring the company's share to a current level that is just slightly below a 52-week high. Earnings per share of 97 cents topped the consensus estimate by 20% and outperformed the year-prior quarter. On a year-over-year basis, net sales increased by $15.9 million to $721.6 million, which included $33.2 million from currency translation thanks to SNA's continued geographic diversification initiatives. The company pointed out that 44% of its first quarter sales came from outside the United States.

"Snap-on’s first quarter results clearly reinforce the strategic importance of our global scope and customer diversification initiatives, particularly in light of the more challenging economic environment in the United States," said Nick Pinchuk, Snap-on’s president and chief executive officer. "Our broad and expansive product portfolio and global customer base, combined with the essential nature of the productivity solutions we provide to professional users, has us well-positioned to achieve a strong and sustainable platform for profitable growth."

Estimates Climbing Higher

Snap-on said it expects full year 2008 sales and earnings to exceed 2007 levels. Wall Street is also bullish on the company’s future. Four out of five covering analysts hiked full-year 2008 earnings forecasts from last month’s $3.72 per share to $3.93, with one analyst bumping the projection up one more penny higher. The most accurate estimate is more favorable at $4.01 per share.

Content Courtesy: Zacks Investment Research

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