Higher costs pose risk for investors

Article Excerpt

SNAP-ON INC. $197 is a hold. The company (New York symbol SNA; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 53.4 million; Market cap: $10.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.9%; TSINetwork Rating: Average; www.snapon.com) continues to see strong demand from independent garage operators for its tools as more people fix their older cars given shortages of computer chips and other supply disruptions for automakers. In the quarter ended April 2, 2022, Snap-On’s overall revenue rose 6.5%, to $1.19 billion from $1.11 billion a year earlier. Thanks to savings from an ongoing plan to improve efficiency, earnings gained 12.9%, to $217.4 million from $192.6 million. Due to fewer shares outstanding, per-share earnings rose 14.3%, to $4.00 from $3.50. The stock trades at a reasonable 12.5 times the $15.80 a share that the company will probably earn in 2022. However, higher prices for steel and other inputs could squeeze profit margins. Snap-On is a hold. hold…

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