Motley Fool Income Investor recommendation Snap-on
Judging by earnings released Tuesday morning, Snap-on shows no signs of running out of steam. First-quarter earnings grew more than 76% and sales advanced nearly 20% as management cuts costs, improves margins, and integrates last fall's acquisition of ProQuest's
Quarterly sales continued to grow across product platforms and regions, with notable strength in the tools segment in the United States and international franchises in the U.K. and Australia. For the rest of the year, management reckons it will see "continued operating and earnings improvement," but didn't provide more specifics in the earnings release.
Analysts on average expect full-year earnings of $2.61, but that could be ramped up due to the strong first quarter, which has also caused a 15% jump in the stock price. That means the forward P/E has become rather rich at close to 22. I recently pointed out that Snap-on is a solid cash generator, but with the recent run, one has to wonder how much good news is now priced into the shares.
Snap-on is also more richly valued than competing tool and accessory firms such as Black & Decker
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
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