UBS Recommends “Sell” on Snap-On Incorporated (NYSE: SNA) Stock

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UBS initiated coverage on Snap-on Incorporated (NYSE: SNA) stock with a “Sell rating” hurting the stock sentiment today, which lead to 2.5% fall (as of 12:42 pm GMT-4; Source: Google finance). While the exact reasons are not out yet, lets have a look at the company’s performance.

The group’s second quarter of 2020 performance has also been disappointing, with Net sales falling 23.9% yoy to $724.3 million during the second quarter of 2020. The group witnessed 22.9%, organic sales decline, $14.4 million of unfavorable foreign currency translation, and $2.3 million of acquisition-related sales. As per the segment performance, Commercial & Industrial Group segment net sales fell to $261.9 million from $335.0 million last year. Snap-on Tools Group segment net sales fell to $323.3 million during the quarter from $405.8 million last year, due to a mid-teen decline in the United States and a nearly 40% fall in the segment’s international operations. Repair Systems & Information Group segment net sales fell to  $245.0 million in the quarter from $348.9 million last year.

Operating earnings before financial services for the quarter of $91.1 million, or 12.6% of sales, including $5.8 million of direct costs associated with COVID-19. Excluding the restructuring charges in 2020, operating earnings before financial services, as adjusted, of $95.1 million, or 13.1% of sales, decreased $94.8 million, or 49.9%, from 2019 levels. Consolidated operating earnings reached $148.7 million, including $5.8 million of direct COVID-19-related costs, $4.0 million of restructuring charges and $4.1 million of unfavorable currency effects, from $250.5 million last year. Net earnings fell to $101.2 million, or $1.85 per diluted share, from $180.4 million, or $3.22 per diluted share, a year ago.

 

On the positive side, Management declared quarterly common stock dividend of $1.08 per share payable September 10, 2020 to shareholders of record on August 20, 2020. The group has been paying consecutive quarterly cash dividends, without interruption or reduction, since 1939.

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