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Shares of Snap-On Incorporated SNA hit a new 52-week high of $365.35 on Nov. 13, 2024, before dropping to close trading at $361.26. SNA has seen its shares rise steadily in the past three months, driven by progress on its growth initiatives.

In the past three months, Snap-On shares have rallied as much as 30.8% compared with the broader industry’s 16.4% rise and the Zacks Consumer Discretionary sector’s 14.4% growth. The stock also outpaced the S&P 500’s rally of 8.3% in the same period.

SNA's 3-Month Stock Performance

The company’s growth is driven by efforts to strengthen the franchise network, build better relationships with repair shop owners and managers, and expand into key industries in emerging markets. Management’s focus on the Rapid Continuous Improvement (RCI) process remains on course.

The Snap-On stock is trading above its 50-day and 200-day moving averages, signaling strong upward momentum and price stability. This technical strength indicates positive market sentiment and confidence in the global professional tools, equipment, and related solutions provider’s financial health and prospects.

Now, what should your next move be? Should you accumulate shares, hold positions or book profits? Before arriving at any decision, let us explore the company's underlying fundamentals.

Breaking Down SNA’s Formula for Market Success

Snap-on’s robust business model enhances value creation by improving safety, service quality, customer satisfaction and innovation. The company is dedicated to various principles and processes aimed at creating value in areas like RCI. The RCI process is designed to enhance organizational effectiveness and minimize costs while boosting SNA’s sales and margins, and generating savings.

Savings from the RCI initiative reflect productivity gains from ongoing process improvement. Management is committed to enhancing customer service, and manufacturing and supply-chain capabilities through RCI initiatives and further investments. Snap-On’s focus on innovation is also promising, with continuous investments in new products and increasing global brand awareness.

Positive trends among vehicle OEMs, dealerships and independent repair shops are driving investments in tools and equipment, likely expanding capabilities to support new models and the complexity of repairs. Snap-on’s Repair Systems & Information Group has strengthened its reach into OEM dealership programs and independent garages, highlighting solid growth potential and opportunities with repair shop owners and managers.

The economic outlook for vehicle repair remains positive, supporting Snap-on’s growth. The company continues to invest in tools and equipment to enhance its ability to support new models and manage complex repairs. SNA’s RS&I Group has extended its reach in OEM dealership programs and strengthened its presence in independent garages, positioning it well to attract repair shop owners and managers.

The Tools Group segment is prioritizing product development, manufacturing improvements and sales efforts for the near term. Critical industries remain robust, presenting various opportunities, while torque tools are gaining importance among critical industry clients. The industrial division is performing strongly, with rising profitability and growing demand for customized solutions, which will likely drive sales and profits.

Management expects SNA’s markets and operations to remain resilient despite uncertainties in the broader operating environment. For the remainder of 2024, Snap-On anticipates steady progress on its growth pathways, leveraging strengths in automotive repair and expanding its customer base across key industries and regions.

SNA’s Estimates Indicate Uptrend

The Zacks Consensus Estimate for Snap-On’s 2024 and 2025 EPS moved up 0.5% and 0.9%, respectively, in the last 30 days. The upward revision in earnings estimates indicates a bullish outlook for the stock.

For 2024, the Zacks Consensus Estimate for SNA’s EPS implies 3% year-over-year growth. The consensus mark for 2025 sales and earnings indicates 3.2% and 3.6% year-over-year growth, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Could Challenges Be Ahead for Snap-On’s Growth?

Although Snap-On sees favorable trends across most markets, it could succumb to tough macroeconomic conditions. These include inflationary pressures and other headwinds. Delayed financial recovery in China is acting as a deterrent.

Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind hurting SNA’s performance.

What Does SNA’s Valuation Imply?

With the stock steadily ticking up, Snap-On is trading at a forward 12-month P/E multiple of 18.17X, slightly exceeding the industry average of 18.16X but below the S&P 500’s 22.63X multiple. At current levels, Snap-On’s stock valuation looks slightly more expensive than its peers.

The premium valuation suggests that investors have strong expectations for Snap-On’s future performance and prospects. While success in its initiatives could further strengthen its market leadership, failure could pose serious challenges for the company.

How to Play SNA Stock?

Snap-On shows strong long-term growth potential, driven by ongoing initiatives. Management expects steady progress by leveraging strengths in automotive repair, expanding its customer base across regions and targeting critical industries. The company remains confident in its resilience to market uncertainties and anticipates progress along its defined growth pathways.

Although trading at a slight premium to its peers, the stock’s valuation marks an attractive entry point. For existing shareholders, holding onto the stock could yield strong long-term returns. SNA currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Consumer Discretionary Picks

We have highlighted three other top-ranked stocks, namely Ralph Lauren RL, Under Armour UAA and Gildan Activewear GIL.

Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia, and internationally. It carries a Zacks Rank #2 at present.

Ralph Lauren has a trailing four-quarter earnings surprise of 9.1%, on average. The Zacks Consensus Estimate for RL’s current fiscal-year sales and earnings indicates growth of 3.5% and 13.6%, respectively, from the year-ago reported figures.

Under Armour is one of the leading designers, marketers and distributors of authentic athletic footwear, apparel and accessories for a wide variety of sports and fitness activities in the United States and internationally. It currently has a Zacks Rank #2.

The Zacks Consensus Estimate for UAA’s current fiscal-year sales and EPS implies declines of 10.6% and 50%, respectively, from the prior-year actuals. The company has a trailing four-quarter earnings surprise of 75.1%, on average.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North America apparel market. GIL carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for GIL’s 2024 sales and EPS indicates an increase of 1.5% and 15.6%, respectively, from the year-ago reported levels. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

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