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

Analyst Recommendations

This is a summary of current ratings and target prices for Snap-on and L S Starrett, as reported by MarketBeat.

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

Snap-on presently has a consensus target price of $192.25, suggesting a potential upside of 27.32%. Given Snap-on’s higher probable upside, analysts clearly believe Snap-on is more favorable than L S Starrett.

Profitability

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

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

Dividends

Snap-on pays an annual dividend of $3.80 per share and has a dividend yield of 2.5%. L S Starrett pays an annual dividend of $0.10 per share and has a dividend yield of 2.1%. 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.

Institutional and Insider Ownership

41.7% of L S Starrett shares are owned by institutional investors. 4.0% of Snap-on shares are owned by insiders. Comparatively, 2.1% of L S Starrett shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Snap-on has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, L S Starrett has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Snap-on $3.69 billion 2.30 $557.70 million $10.12 14.92
L S Starrett $216.33 million 0.16 -$3.63 million N/A N/A

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

Summary

Snap-on beats L S Starrett on 12 of the 14 factors compared between the two stocks.

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.

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.

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