L S Starrett (SCX) & Snap-on (SNA) Critical Review

L S Starrett (NYSE:SCX) and Snap-on (NYSE:SNA) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, valuation, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

41.3% of L S Starrett shares are owned by institutional investors. 2.1% of L S Starrett shares are owned by insiders. Comparatively, 4.0% of Snap-on shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares L S Starrett and Snap-on’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
L S Starrett $216.33 million 0.15 -$3.63 million N/A N/A
Snap-on $3.69 billion 2.53 $557.70 million $10.12 16.43

Snap-on has higher revenue and earnings than L S Starrett.

Profitability

This table compares L S Starrett and Snap-on’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L S Starrett -2.11% -9.15% -4.27%
Snap-on 16.86% 21.35% 12.46%

Dividends

L S Starrett pays an annual dividend of $0.10 per share and has a dividend yield of 2.2%. Snap-on pays an annual dividend of $3.80 per share and has a dividend yield of 2.3%. Snap-on pays out 37.5% of its earnings in the form of a dividend. Snap-on has increased its dividend for 8 consecutive years. Snap-on is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

L S Starrett has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Snap-on has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for L S Starrett and Snap-on, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L S Starrett 0 0 0 0 N/A
Snap-on 0 1 3 0 2.75

Snap-on has a consensus price target of $192.25, indicating a potential upside of 15.65%. Given Snap-on’s higher possible upside, analysts plainly believe Snap-on is more favorable than L S Starrett.

Summary

Snap-on beats L S Starrett on 11 of the 14 factors compared between the two stocks.

About L S Starrett

The L.S. Starrett Company, together with its subsidiaries, manufactures and sells industrial, professional, and consumer measuring and cutting tools, and related products primarily in North America, Brazil, China, the United Kingdom, Australia, and New Zealand. The company's products include precision tools, electronic gages, gage blocks, optical vision and laser measuring equipment, custom engineered granite solutions, squares, band saw blades, hole saws, hacksaw blades, jig saw blades, and reciprocating saw blades, as well as M1 lubricant and precision ground flat stock products. It also provides measuring tools, such as micrometers, vernier calipers, height gages, depth gages, dial indicators, steel rules, and combination squares, as well as custom, non-contact, and in-process gaging products; and force measurement and material test equipment. In addition, the company offers material test systems comprising hardware and software; manual and automated field of view measurement systems; and hand tools for measuring, marking, and layout that include tapes, levels, chalk lines, and other products for building trades, and construction and retail trades. Further, it provides carbide tipped products for cutting ferrous materials, and non-ferrous metals and castings. The company primarily distributes its precision hand tools, and saw and construction products through distributors or resellers. It serves the metalworking, aerospace, and automotive markets; marine and farm equipment shops, and do-it-yourselfers; and tradesmen, which comprise builders, carpenters, plumbers, and electricians. The L.S. Starrett Company was founded in 1880 and is headquartered in Athol, Massachusetts.

About Snap-on

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.

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