Snap-On: Snap Up This Strong Signal While It’s Still Cheap

Key Points

• After its Q2 release and guidance update, Snap-On sent a clear signal: this stock will move higher in H2 2025.
• The growth, cash flow, and capital return are central to the story. 
• The technical outlook and analysts' sentiment trends suggest a new all-time high will be set this year.

Snap-On’s NYSE: SNA stock price action threw a strong signal following the Q2 earnings release and outlook update, signalling that a rapid increase in share price will follow. The signal is a 6% increase in the share price, revealing a high degree of market commitment. The commitment is significant, as the move confirms support at the bottom of a critical range, aligning with the long-term uptrend and indicating that a minimum 12% upside remains ahead.

The 12% upside will align this market with the all-time highs, a critical resistance target and pivot point, setting it up to set a new high and open the door to a more sustained rally for this industrial stock. 

Other indicators aligning with the bullish signal include trading volume, stochastic, and MACD indicators. The volume didn’t spike robustly but is up noticeably for the week and sufficient to be off interest, topping the 1.5 million mark and growing as of midweek of the report.

Regarding the indicators, MACD and stochastic are firing strong bullish crossovers low in their respective ranges, indicating strengthening market support and a market with room to run. In this scenario, Snap-On stock can rally higher through the end of the quarter and year, easily setting new highs in the process. 

Analysts' sentiment trends favor an upswing in Snap-On share prices and a rise to new all-time highs. Analysts' sentiment has cooled over the past few years but remains bullish, with the six current reports tracked by MarketBeat rating the stock as a Moderate Buy.

The bias is bullish, with four of the six rating as an outright Buy, and the consensus target forecasts a 5% upside. The critical factor is that these analysts provide a bullish support base from which new coverage and price target increases can propel market sentiment. The high-end target of $400 is sufficient to put this stock well above its current all-time high. 

Likewise, the institutional trends align with a solid support base, uptrend, and potential for new all-time highs. The group, which owns approximately 85% of the stock, has been buying robustly this year, with Q1 and Q2 buying activity outpacing selling by more than 2-to-1 on a dollar basis.

More importantly, their activity carried into Q3 and strengthened, with virtually no selling in the first two weeks of July, only buying to the tune of nearly $500 million. If these trends continue, Snap-On stock will have no choice but to more higher. 

Snap-On Relieves Macroeconomic Concerns, Guides Higher for H2

Snap-On had a solid quarter in Q2, relieving market concerns over macroeconomic headwinds with the results and guidance update. The company reported $1.1 billion in revenue, flat compared to the prior year, and a full 100 basis points above MarketBeat’s reported consensus estimate.

The strength was driven by Snap-On’s diversified model and operational quality, with Commercial & Industrial down slightly and offset by increases in the Tools and Repair segments. 

Margin news is also good. Holding steady year over year despite the impacts of tariffs and inflationary headwinds, GAAP EPS is at $4.72 or nearly 200 basis points above forecasts.

Share buybacks aided the EPS, reducing the count nearly 1% for the quarter and YTD periods and are expected to continue through year’s end. Regarding the guidance, the company reaffirmed its outlook for the year, including for CAPE and effective tax rates, reassuring the market that it is on track for profitable growth.

Snap-On’s Balance Sheet, Another Reason to Want to Own It

Snap-On’s balance sheet provides investors another reason to consider owning it. Not only is the company growing profitably and producing sufficient cash flow to sustain the capital return outlook, but it is also able to improve its fortress-quality balance sheet.

Highlights at the end of Q2 include YTD increases in cash, receivables, inventories, and current and total assets, compounded by reduced liability. Equity is up significantly for this dividend-paying stock, and leverage is low, with the balance sheet showing net cash and debt of approximately 0.2 times the equity.