Snap-on (NYSE: SNA) and Stanley Black & Decker (NYSE:SWK) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.
Snap-on pays an annual dividend of $3.28 per share and has a dividend yield of 2.2%. Stanley Black & Decker pays an annual dividend of $2.52 per share and has a dividend yield of 1.6%. Snap-on pays out 32.4% of its earnings in the form of a dividend. Stanley Black & Decker pays out 33.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Snap-on has raised its dividend for 8 consecutive years and Stanley Black & Decker has raised its dividend for 50 consecutive years. Snap-on is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent ratings and price targets for Snap-on and Stanley Black & Decker, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Stanley Black & Decker||0||3||15||0||2.83|
Snap-on currently has a consensus price target of $193.00, suggesting a potential upside of 31.24%. Stanley Black & Decker has a consensus price target of $181.13, suggesting a potential upside of 18.27%. Given Snap-on’s higher probable upside, research analysts clearly believe Snap-on is more favorable than Stanley Black & Decker.
This table compares Snap-on and Stanley Black & Decker’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Stanley Black & Decker||9.62%||15.89%||5.91%|
Institutional & Insider Ownership
99.4% of Snap-on shares are held by institutional investors. Comparatively, 84.0% of Stanley Black & Decker shares are held by institutional investors. 4.0% of Snap-on shares are held by insiders. Comparatively, 0.7% of Stanley Black & Decker shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Snap-on and Stanley Black & Decker’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Snap-on||$3.69 billion||2.26||$557.70 million||$10.12||14.53|
|Stanley Black & Decker||$12.75 billion||1.85||$1.23 billion||$7.45||20.56|
Stanley Black & Decker has higher revenue and earnings than Snap-on. Snap-on is trading at a lower price-to-earnings ratio than Stanley Black & Decker, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Snap-on has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Stanley Black & Decker has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.
Snap-on beats Stanley Black & Decker on 11 of the 17 factors compared between the two stocks.
Snap-on Company Profile
Snap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. The company operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments. It offers hand tools, including wrenches, sockets, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools, torque measuring instruments, and other products; power tools, such as cordless, pneumatic, hydraulic, and corded tools; and tool storage products comprising tool chests, roll cabinets, and other products. The company also provides handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics. In addition, it offers solutions for the service of vehicles and industrial equipment, such as wheel alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane systems, collision repair equipment, vehicle air conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment, safety testing equipment, battery chargers, and hoists. Further, the company provides financing programs to facilitate the sales of its products and support its franchise business. It serves aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation, and technical education industries, as well as vehicle dealerships and repair centers. Snap-on Incorporated was founded in 1920 and is headquartered in Kenosha, Wisconsin.
Stanley Black & Decker Company Profile
Stanley Black & Decker, Inc. is a global provider of hand tools, power tools and related accessories, mechanical access solutions, such as automatic doors and commercial locking systems, electronic security and monitoring systems, healthcare solutions, engineered fastening systems, and products and services for various industrial applications. The Company’s segments include Tools & Storage, Security and Industrial. Its Tools & Storage segment consists of the Power Tools and Hand Tools, Accessories and Storage businesses. Its Security segment consists of the Convergent Security Solutions and Mechanical Access Solutions businesses. Its Industrial segment consists of the Engineered Fastening and Infrastructure businesses. It offers brands, such as SIDCHROME, AeroScout, DEWALT, Newell Tools and Craftsman, Irwin, Lenox, Craftsman, BLACK+DECKER, SONITROL, Warren, GRIPCO, Porter-Cable, BOSTITCH and WanderGuard.
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