Snap-On Inc (SNA)

Conclusion

Snap-on designs and sells tools, diagnostic equipment and repair information systems for professional technicians and repair shops, and it runs a financial services arm. At a price of 373.82 USD on 2026-11-09, the market capitalisation is 19.3 billion USD.

The verdict is fair. Today's multiples sit above their own ten-year medians: a P/E of 19.07 against a median of 15.71, and an EV/EBITDA of 12.94 against 10.64. The discounted cash flow gives 415.04 USD per share, and the fair value from historical multiples is 307.96 USD. The fair value band runs from 289.20 to 433.80 USD with a midpoint of 361.50 USD, a margin of safety of -3.3% at the current price. The reverse DCF implies growth of 4.85%, against revenue growth of 7.49% a year over five years and free cash flow per share growth of 1.97% a year over five years.

The strongest numbers are ROIC of 18.59% against a WACC of 8.58%, net cash with a net debt to EBITDA of -0.27, and a free cash flow conversion of 100.1% over the last twelve months. The weakest are the operating margin of 23.21%, below its median of 25.33%, the estimate revisions, with nine downward revisions for the current year in the last 30 days, and a price-to-sales ratio of 3.81 against a median of 2.80.

Financial health

Financial strength is green, held up by net cash, with a net debt to EBITDA of -0.27, a current ratio of 3.55, a quick ratio of 2.57, a debt to equity of 0.21 and an interest coverage of 26.6x. The Altman Z-score is 7.48, in the safe zone. The Altman model was designed for manufacturers, and Snap-on is a manufacturer, so the result applies. Insolvency risk is low, about 0.04% by the estimate of the Ohlson model over one to two years, based on figures at 2025-12-31. Liquidity and leverage show no pressure on the balance sheet, and the company's debt to equity ratio is low by any standard.

Earnings quality

Earnings quality is green. Free cash flow conversion is 100.1% over the last twelve months and 97.6% over five years, and the accrual ratio is -0.79%, which indicates that reported earnings are backed by cash. Stock-based compensation is 0.1% of revenue, and free cash flow after it is 1.007 billion USD. The share count fell at a compound rate of -0.67% over five years, which reflects buybacks. The Piotroski score is 6 of 9. The Beneish M-score is not available. Over the last eight quarters the company beat estimates five times and missed three times, with an average surprise of -3.46%. Estimate revisions are negative: the current-year estimate changed by -3.46% over 90 days, and the next-year estimate by -3.66%, with a next-year growth estimate of 8.31%.

Profitability

Profitability is green, with ROIC of 18.59% against a WACC of 8.58%, a ROIC minus WACC value of 10.01%, and a five-year median ROIC of 19.54%. The gross margin is 51.2% against a median of 50.3%, the net margin is 20.0% against 18.4%, while the operating margin is 23.2% against 25.3%. Operating margin stability is 2.88%. Return on equity is 16.6%. The DuPont split shows a net margin of 19.7%, an asset turnover of 0.61 and an equity multiplier of 1.42, so the return comes mainly from margin rather than leverage. The tax rate is 22.0%.

Growth

Growth is green. Revenue compounded at 2.11% over three years, 7.49% over five years and 4.40% over ten years. Earnings per share compounded at 4.48%, 10.89% and 9.01% over the same periods. Free cash flow per share compounded at 20.28% over three years, but only 1.97% over five years and 10.42% over ten. Revenue grew in 8 of the last 10 years. The recent three-year pace is slower than the five-year pace, and the next-year growth estimate of 8.31% sits above the three-year revenue record.

Valuation

Valuation is yellow. Multiples are above their ten-year medians: P/E at 19.07 against 15.71, a premium of 21.4%; EV/EBITDA at 12.94 against 10.64, a premium of 21.6%; price to free cash flow at 19.05 against 15.56, a premium of 22.4%; price to sales at 3.81 against 2.80, a premium of 35.7%; price to book at 3.16 against 2.95, a premium of 7.3%. The DCF gives 415.04 USD per share at a discount rate of 8.9%, with 57.5% of its value in the terminal value. The fair value from historical multiples is 307.96 USD. The fair value is an order of magnitude built on fixed assumptions, not a price target. The reverse DCF implies growth of 4.85%. Dividend yield is 3.71%, the forward yield is 2.66%, and the payout on free cash flow is 70.6%.

Risks

A lower operating margin would reduce the cash returns that now support ROIC of 18.59%, and the valuation rests on that spread over the 8.58% WACC. Negative estimate revisions would weaken the growth the price already implies, and a fall in free cash flow per share growth would undermine the case further. A high premium on price to sales leaves less room if growth slows. The DCF value depends on the terminal value for 57.5% of its total, so it is sensitive to the discount rate and the 2.5% terminal growth assumption. The Beneish M-score is not available. This analysis has no debt maturity schedule and no revenue breakdown by segment, so refinancing risk and the mix of earnings across the business cannot be assessed.