Critical Review: Snap-On (NYSE:SNA) vs. CLARCOR (CLC)

CLARCOR (NYSE: CLC) and Snap-On (NYSE:SNA) are both mid-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Insider & Institutional Ownership

86.9% of CLARCOR shares are held by institutional investors. Comparatively, 99.4% of Snap-On shares are held by institutional investors. 3.0% of CLARCOR shares are held by company insiders. Comparatively, 3.7% of Snap-On shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for CLARCOR and Snap-On, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CLARCOR 0 0 0 0 N/A
Snap-On 0 2 7 0 2.78

Snap-On has a consensus price target of $193.63, indicating a potential upside of 7.34%. Given Snap-On’s higher probable upside, analysts clearly believe Snap-On is more favorable than CLARCOR.

Profitability

This table compares CLARCOR and Snap-On’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CLARCOR 7.71% 10.16% 6.66%
Snap-On 15.95% 20.82% 11.72%

Earnings & Valuation

This table compares CLARCOR and Snap-On’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CLARCOR N/A N/A N/A $2.84 29.23
Snap-On $3.43 billion 3.00 $546.40 million $9.73 18.54

Snap-On has higher revenue and earnings than CLARCOR. Snap-On is trading at a lower price-to-earnings ratio than CLARCOR, indicating that it is currently the more affordable of the two stocks.

Dividends

CLARCOR pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. Snap-On pays an annual dividend of $3.28 per share and has a dividend yield of 1.8%. CLARCOR pays out 35.2% of its earnings in the form of a dividend. Snap-On pays out 33.7% 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. CLARCOR has increased its dividend for 8 consecutive years and Snap-On has increased its dividend for 53 consecutive years. Snap-On is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Snap-On beats CLARCOR on 12 of the 13 factors compared between the two stocks.

About CLARCOR

CLARCOR Inc. is engaged in providing filtration products, filtration systems and services, and consumer and industrial packaging products. The Company’s segments are Engine/Mobile Filtration and Industrial/Environmental Filtration. Its Engine/Mobile Filtration segment manufactures and sells filtration products for on-road and off-road mobile and stationary applications. Its Industrial/Environmental Filtration segment manufactures and sells filtration products used in industrial and commercial processes, and in buildings and infrastructures of various types. Its liquid process filtration products include specialty industrial process liquid filters; filters for pharmaceutical processes and beverages; filtration systems, filters and coalescers for the oil and natural gas industry; filtration systems for aircraft refueling, anti-pollution, sewage treatment and water recycling; bilge water separators, and sand control filters for oil and gas drilling.

About Snap-On

Snap-on Incorporated is a manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions. The Company’s segments include the Commercial & Industrial Group, the Snap-on Tools Group, the Repair Systems & Information Group, and Financial Services. The Commercial & Industrial Group consists of business operations serving a range of industrial and commercial customers, including customers in the aerospace, natural resources, government, power generation, transportation and technical education markets. The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers, primarily owners and managers of independent repair shops and original equipment manufacturer (OEM) dealership service and repair shops. Financial Services consists of the business operations of its finance subsidiaries.

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