Snap-on Inc. SNA reported first-quarter 2025 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Also, revenues and earnings declined from the year-ago period.

Snap-on’s first quarter faced challenges due to economic uncertainty, leading to mixed results. Meanwhile, the company achieved record operating margins in its Commercial & Industrial Group and Repair Systems & Information Group, contributing to an overall increase in gross margin.

Snap-on’s earnings of $4.51 per share missed the Zacks Consensus Estimate of $4.81. The figure declined 5.1% from adjusted earnings of $4.75 in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Snap-on Incorporated Price, Consensus and EPS SurpriseSnap-On Incorporated Price, Consensus and EPS Surprise

Snap-On Incorporated price-consensus-eps-surprise-chart | Snap-On Incorporated Quote

Driven by mixed results, shares of Snap-on declined 5.8% in the pre-market trading session. The decrease in the share price can be attributed to continued softness in the Tools Group segment, led by the reluctance of technician customers to purchase financed products, underscoring the cautious consumer sentiment. This Zacks Rank #3 (Hold) company’s shares have lost 12.5% in the past three months compared with the industry's 8.8% decline.

SNA's Stock Price PerformanceZacks Investment Research

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SNA’s Quarterly Performance: Key Metrics & Insights

Net sales declined 3.5% year over year to $1.141 billion and missed the Zacks Consensus Estimate of $1.196 billion. The decrease was due to a 2.3% dip in organic sales and $13.9 million from unfavorable foreign currency translation.

The gross profit of $578.5 million fell 3.1% year over year, whereas the gross margin expanded 20 basis points (bps) year over year to 50.7%. Our Model expected a gross margin of 50.7%, up 20 bps from the year-ago quarter.
 
The company’s operating earnings before financial services totaled $243.1 million, down 10.3% year over year. As a percentage of sales, operating earnings before financial services contracted 160 bps to 21.3% in the first quarter. The Financial Services unit's operating earnings were $70.3 million, up 2.9% year over year.

Consolidated operating earnings (including financial services) were $313.4 million, down 7.6% year over year. As a percentage of sales, operating earnings contracted 130 bps year over year to 25.2%.

Snap-on’s Segmental Analysis

Sales in the Commercial & Industrial Group decreased 4.4% from the year-ago quarter to $343.9 million due to a 2.9% organic decline and a $5.6 million hit from unfavorable foreign currency exchange. The lower sales were mainly due to reduced activity with customers in critical industries, especially the military, which outweighed gains in other sectors. Additionally, the hand tools business in Europe also declined. For the quarter, we expected sales of $367.1 million for the segment.

The Tools Group segment’s sales declined 7.4% year over year to $462.9 million. We estimated sales of $495.6 million for the segment. The dip resulted from an organic sales decline of 6.8% and $3.6 million of unfavorable foreign currency translation. Organic sales decreased due to lower activity in the U.S. operations, somewhat negated by increased sales in the segment’s international operations.

Sales in Repair Systems & Information Group improved 2.6% year over year to $475.9 million, with organic sales growth of 3.7%, offset by unfavorable currency impacts of $4.9 million. Organic sales grew, driven by increased activity with OEM dealerships, and higher sales of diagnostic and repair information products to independent repair shops, though partially offset by lower undercar equipment volumes. Our estimate for sales from this segment was $468.4 million.

The Financial Services business’ revenues rose 2.5% year over year to $102.1 million. Our estimate for sales from this segment was $100.7 million.

Story Continues

SNA's Financial Snapshot

Snap-on ended the first quarter of 2025 with cash and cash equivalents of $1.43 billion, with shareholders’ equity (before non-controlling interest) of $5.5 billion. The company expects a capital expenditure of $100 million for 2025.

What’s Ahead for Snap-on?

Management expects SNA’s markets and operations to have considerable resilience against the uncertainties of the operating landscape. For 2025, SNA anticipates progress along its defined runways for growth.

Management anticipates continued progress by leveraging capabilities in the automotive repair arena, as well as expanding its customer base in automotive repair and across geographies, including critical industries. The company expects an effective tax rate of 22-23% for 2025.

Key Picks

Some top-ranked stocks are The Gap, Inc. GAP, Stitch Fix SFIX and Gildan Activewear Inc. GIL.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Stitch Fix delivers customized shipments of apparel, shoes and accessories for women, men and kids. It currently has a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Stitch Fix’s fiscal 2025 earnings implies growth of 64.7% from the year-ago actuals. SFIX delivered a trailing four-quarter average earnings surprise of 48.9%.

Gildan Activewear is a manufacturer and marketer of premium-quality branded basic activewear. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s earnings and revenues implies growth of 16% and 4.4%, respectively, from the year-ago actuals. GIL delivered a trailing four-quarter average earnings surprise of 5.3%.

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Snap-On Incorporated (SNA):Free Stock Analysis Report

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Stitch Fix, Inc. (SFIX):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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