Snap-on Earnings Preview: Sales Growth Expected to Continue - W.W. Grainger (NYSE:GWW), Danaher (NYSE:DHR)

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Snap-on (NYSE: SNA) is on scheduled to post its second-quarter 2011 results tomorrow, July 21, before the opening bell. Investors will be watching to see if the streak of sales growth over the past few quarters has continued.Analysts are looking for the tool maker to report per-share earnings of $1.08, which is up from $0.78 per share in the same period of last year. The estimate is unchanged in the past 60 days. The consensus forecast also calls for revenues of $725.9 million, an increase of 12.1% from a year ago.Note that analysts have underestimated Snap-on earnings in each quarter since before the recession. EPS topped consensus estimates by four cents in the first quarter. And analysts so far are looking for year-over-year growth of 22.3% for earnings and 9.8% for revenue in the current quarter.The Company

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Kenosha, Wisconsin-based Snap-on manufactures and markets tools, diagnostics equipment and software, and service solutions for professional users primarily in the United States and Europe. Brands include Snap-on, Blackhawk, Lindstrom and ShopKey. The company also provides financial services to franchisees and customers.During the three months that ended in June, the company said it will continue to expand into emerging markets and it declared a quarterly dividend—Snap-on says it has not missed a quarterly dividend since 1939.PerformanceThe company has a dividend rate of about 2% and a return on equity of 13.9%. The long-term earnings per share growth forecast is 11.7%. The P/E ratio is less than the industry average and the S&P average. The PEG ratio is 1.2. The consensus recommendation of analysts has been to buy SNA for more than 90 days. The mean price target (or where analysts expect the share price to go) is currently $75.13.The share price ended Tuesday at $61.96, down from a recent multiyear high of $64.36. Shares are 11.3% higher than six months ago and up 43.7% from a year ago. The stock has outperformed its industry average and the broader markets over the past year.Action Items:

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Bullish:

Traders interested in exchange traded funds invested in Snap-on might want to consider the following trades:

SPDR S&P 500 Trust (NYSE: SPY): +22.4% in the past year
Industrial Select Sector SPDR Fund (NYSE: XLI): +27.7% in the past year
Vanguard Small-Cap Index Fund (NYSE: VB): +34.4% in the past year

Bearish: Traders more interested in Snap-on's competitors might want to consider these alternative positions:

Danaher (NYSE: DHR): +39.1% in the past year
W.W. Grainger (NYSE: GWW): +47.5% in the past year
Stanley Black & Decker (NYSE: SWK): +29.1% in the past year
Makita (NASDAQ: MKTAY): +53.8% in the past year

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