SNA
Snap-On Inc
Industrial/Transportation, Consumer
10/22/2018
Presented
| Date | 10/17/2018 |
| Price | $167.57 |
| Market Cap | $9.45B |
| Ent Value | $11.53B |
| P/E Ratio | 15.19x |
| Book Value | $56.33 |
| Div Yield | 1.96% |
| Shares O/S | 56.40M |
| Ave Daily Vol | 614,769 |
| Short Int | 13.47% |
Current
| Price | $295.68 |
| Market Cap | $15.58B |
| Snap-On, Inc. engages in the manufacture and marketing of tools, equipment, diagnostics, repair information, and systems solutions for professional users performing critical tasks. It operates through following segments: Commercial and Industrial Group; Snap-On Tools Group; Repair Systems and Information Group; and Financial Services. The Commercial and Industrial Group segment consists of business operations that serve the aerospace, natural resources, government, power generation, transportation and technical education markets. The Snap-On Tools Group segment includes business operations primarily serving vehicle service and repair technicians through worldwide mobile tool distribution channel. The Repair System and Information Group segment serves other professionals vehicle repair customers, primarily owners and managers of independent repair shops and original equipment manufacturer dealerships through direct and distributor channels. The Financial Services segment comprises of installment sales and lease contracts arising from franchisees' customers, and business loans and vehicle leases to franchisees. The company was founded by Joseph Johnson and William Seidemann in 1920 and is headquartered in Kenosha, WI. |
Publicly traded companies mentioned herein: Signet Jewelers Ltd (SIG), Snap-On Inc (SNA)
Highlights
The presenter is short shares of Snap-On (SNA) on the basis that lenient policies with regard to accounting for late payments, and allowing franchisees to have decision making power on loans could negatively impact the company in the near- to mid-term. The presenter cites reports that franchisees have been known to make payments on behalf of customers in order to retain platinum status, which gives them the authority to overrule decisions made by corporate about the creditworthiness of customers. Additionally, while the company made a strong push selling expensive toolbox storage units from 2012 until 2016, these sales have been flat to down for roughly the past year and a half, and the presenter expects that trend to become more severe. On a FCF basis, which represents 45% - 50% of net income, the presenter is forecasting $5.90/share in 2019 vs. Street estimates of $11.80(per share). At its current 15x multiple, which the presenter feels is generous, the stock could trade down to $88 (50% downside risk).
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