Snap-On Inc. $48 - New York symbol SNA

SNAP-ON INC. $48 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 57.6 million; Market cap: $2.8 billion; WSSF Rating: Average) makes and distributes hand and power tools and computerized diagnostic equipment for automotive mechanics. The company sells its products through a fleet of franchised vans that visit garages. Snap-On continues to make strong progress with its plan to cut costs and expand sales with new products and better customer service. The company is also selling some of its less profitable operations. In the third quarter of 2007, these initiatives cut Snap-On’s expenses by $7 million. That, plus an acquisition in late 2006, helped earnings grow 48.9% to $0.70 a share (total $41.1 million) from $0.47 a share ($27.6 million) a year earlier. Sales grew 14.5%, to $680.7 million from $594.7 million. Snap-On gets about 40% of its sales from overseas operations, and favorable currency rates accounted for 20% of the sales increase. Thanks to its improving profitability, Snap-On recently increased its quarterly dividend 11.1%, from $0.27 a share to $0.30. The new annual rate of $1.20 yields 2.5%. The stock trades at 15.6 times its likely 2007 earnings of $3.07 a share, and just above its sales of $47.80 a share. Snap-On is a buy.

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