Snap-On Earnings: Margins Rise with Revenues, Net Income Rises

S&P 500 (NYSE:SPY) component Snap On Inc. (NYSE:SNA) reported net income above Wall Street’s expectations for the third quarter. Snap-on is a global innovator, manufacturer and marketer of tools, diagnostics, equipment, software and service solutions.

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Snap On Inc. Earnings Cheat Sheet

Results: Net income for Snap On Inc. rose to $74.1 million ($1.26 per share) vs. $67.8 million ($1.16 per share) in the same quarter a year earlier. This marks a rise of 9.3% from the year-earlier quarter.

Revenue: Rose 2.1% to $711.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Snap On Inc. beat the mean analyst estimate of $1.20 per share. It fell short of the average revenue estimate of $767.8 million.

Quoting Management: “We believe our third quarter results demonstrate continued progress along our defined runways for coherent growth: enhancing the franchise network, expanding in the vehicle repair garage, extending into critical industries and building in emerging markets,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “These results also underscore the way in which our commitment to the Snap-on Value Creation processes drives ongoing improvement in safety, quality, customer connection, innovation and rapid continuous improvement. As further evidence of our success in connecting with customers and translating that insight into winning innovation, we are honored to have been recognized again in 2012 by both MOTOR Magazine and Professional Tool & Equipment News with multiple awards for Snap-on products in each publication. Finally, these results and achievements reflect significant effort and dedication across the organization and I thank our franchisees and associates worldwide for their extraordinary contributions and commitment.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 5 cents in the second quarter, by 10 cents in the first quarter, and by 15 cents in the fourth quarter of the last fiscal year.

Revenue has increased for four consecutive quarters. Revenue increased 1.5% to $737.9 million in the second quarter. The figure rose 6% in the first quarter from the year earlier and climbed 12.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

Net income has increased 21.5% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 45.8% from the year-earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.21 a share to $1.23 over the last ninety days. For the fiscal year, the average estimate has moved up from $4.96 a share to $5.03 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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