Snap-On "Snaps" Back Into October

Snap On SNA is the leader in supplying tools to American mechanics, and has been in a decade-long drive to ramp up sales and boost margins. Last year Snap-On ran into a recession snag when earnings plummeted 43% and revenues dropped 18%, according to Barron's. Conversely, Barron's writes, this year Snap-On "is showing signs of a strong recovery at home, even as the Kenosha, Wis., company continues to expand overseas. Profit margins have widened in each of the past two quarters, and analysts are estimating full-year earnings of $2.86 a share, followed by $3.58 in 2011, which would represent a gain of 26%." Barron's goes on to say that "Investors, too, are betting on Snap-on, whose shares have rallied to near 47, from a March 2009 low near 21. If the company delivers on Wall Street's expectations, shares could keep rising into the mid-50s and eventually close in on their all-time high of 61.92, established in May 2008." The U.S. accounts for 60% of Snap-On's revenue, Europe makes up 25% and emerging markets cover roughly 10%, and Snap-On has also been able to keep repair shops busy with the aging auto fleet in the United States, where ~40% of cars on the road for more than 10 years. According to Barron's research, "Morningstar estimates Snap-on controls about 55% of the professional tool market, where it competes with Stanley Black & Decker's SWK Mac Tools unit and Danaher's DHR Matco."