ການວິເຄາະທ່າແຮງການເຕີບໂຕຂອງເງິນປັນຜົນຂອງ Snap-On

Recap From September’s Picks

On a price return basis, the Dividend Growth Stocks Model Portfolio (+5.5%) underperformed the S&P 500 (+6.1%) by 0.6%, and on a total return basis, the Model Portfolio (+5.6%) underperformed the S&P 500 (+6.1%) by 0.5%. The best performing stock outperformed the S&P 500 by 18%. Overall, 13 out of the 30 Dividend Growth Stocks outperformed the S&P 500 from September 29, 2022 through October 25, 2022.

ວິທີການສໍາລັບຫຼັກຊັບຂອງຮູບແບບນີ້ mimics ແບບ "All Cap Blend" ໂດຍເນັ້ນໃສ່ການຂະຫຍາຍຕົວຂອງເງິນປັນຜົນ. ຮຸ້ນທີ່ເລືອກໄດ້ຮັບຄະແນນທີ່ໜ້າສົນໃຈ ຫຼື ໜ້າສົນໃຈຫຼາຍ, ສ້າງກະແສເງິນສົດເປັນບວກ (FCF) ແລະ ລາຍຮັບທາງເສດຖະກິດ, ໃຫ້ອັດຕາຜົນຕອບແທນເງິນປັນຜົນໃນປະຈຸບັນ > 1%, ແລະມີສະຖິຕິການເຕີບໂຕຂອງເງິນປັນຜົນຕິດຕໍ່ກັນ 5 ປີ. ຫຼັກຊັບຮູບແບບນີ້ຖືກອອກແບບມາສໍາລັບນັກລົງທຶນທີ່ສຸມໃສ່ການແຂງຄ່າຂອງທຶນໃນໄລຍະຍາວຫຼາຍກ່ວາລາຍຮັບໃນປະຈຸບັນ, ແຕ່ຍັງຊື່ນຊົມອໍານາດຂອງເງິນປັນຜົນ, ໂດຍສະເພາະແມ່ນການຂະຫຍາຍຕົວຂອງເງິນປັນຜົນ.

Featured Stock From October: Snap-On Inc.

Snap-On Inc. (SNA) is the featured stock from October’s Dividend Growth Stocks Model Portfolio. I made SNA a Long Idea in February 2018. Since then, the stock is up 39% vs. a 37% gain for the S&P 500.

Snap-On has grown revenue by 5% compounded annually and net operating profit after-tax (NOPAT) by 10% compounded annually since 2011. The company’s NOPAT margin rose from 12% in 2011 to 19% over the trailing twelve months (TTM), while return on invested capital (ROIC) rose from 11% in 2011 to 16% over the same time.

Figure 1: Snap-On’s Revenue and NOPAT Since 2011

FCF ເກີນເງິນປັນຜົນໂດຍຂອບກ້ວາງ

Snap-On has increased its dividend in each of the past ປີ 12. The company increased its regular dividend from $2.95/share in 2017 to $5.11/share in 2021, or 15% compounded annually. The current quarterly dividend, when annualized, equals $5.68/share, and provides a 2.6% dividend yield. Snap-On last increased its dividend on November 4, 2021. Should the company increase its dividend for a 13^th consecutive year, the dividend yield would be even higher at the current stock price.

More importantly, Snap-On’s strong free cash flow (FCF) easily exceeds the company’s growing dividend payments. From 2017 – 2021, Snap-On’s cumulative $2.9 billion (24% of enterprise value) in FCF is 2.6x the $1.1 billion paid out in dividends, per Figure 2. Over the TTM, the company generated $539 million in FCF and paid out $303 million in dividends.

Figure 2 also shows that Snap-On’s FCF significantly exceeded its dividend payments in each of the past five years.

ຮູບທີ 2: ກະແສເງິນສົດທຽບກັບການຈ່າຍເງິນປັນຜົນຕາມປົກກະຕິ

Companies with FCF well above dividend payments provide higher quality dividend growth opportunities because I know the company generates the cash to support a higher dividend. On the other hand, dividends that exceed FCF cannot be trusted to grow or even be maintained, due to insufficient cash flow.

Snap-On Has Upside Potential

At its current price of $221/share, SNA has a price-to-economic book value (PEBV) ratio of 0.9. This ratio means the market expects Snap-On’s NOPAT to permanently decline by 10%. This expectation seems overly pessimistic for a company that has grown NOPAT by 10% compounded annually since 2011 and 14% compounded annually since 2001.

Even if Snap-On’s NOPAT margin falls to 18% (five-year average) and the company grows revenue by just 4% compounded annually for the next 10 years, the stock would be worth $280+/share today – a 27% upside. In this scenario, Snap-On’s NOPAT would grow just 3% compounded annually over the next decade. ເບິ່ງຄະນິດສາດທີ່ຢູ່ເບື້ອງຫຼັງສະຖານະການ DCF ແບບປີ້ນກັບກັນ.

Should the company grow NOPAT more in line with historical growth rates, the stock has even more upside. Add in Snap-On’s 2.6% dividend yield and a history of dividend growth, and it’s clear why this stock is in October’s Dividend Growth Stocks Model Portfolio.

ລາຍລະອຽດທີ່ ສຳ ຄັນພົບຢູ່ໃນຮູບເງົາການເງິນໂດຍເທັກໂນໂລຢີ Robo-Analyst ຂອງ My Firm

Below are specifics on the adjustments I make based on Robo-Analyst findings in Snap-On’s 10-Ks and 10-Qs:

ໃບແຈ້ງຍອດລາຍຮັບ: ຂ້ອຍໄດ້ເຮັດການປັບຕົວໄດ້ 111 ລ້ານໂດລາ ໂດຍມີຜົນສຸດທິໃນການຖອນຄ່າໃຊ້ຈ່າຍທີ່ບໍ່ແມ່ນການດໍາເນີນງານ 55 ລ້ານໂດລາ (1% ຂອງລາຍໄດ້).

Balance Sheet: I made $1.4 billion in adjustments to calculate invested capital with a net decrease of $233 million. The most notable adjustment was $344 million (6% of reported net assets) in other comprehensive income.

Valuation: I made $1.9 billion in adjustments, with a net decrease to shareholder value of $547 million. Apart from total debt, the most notable adjustment to shareholder value was $663 million in excess cash. This adjustment represents 6% of Snap-On’s market value.

ການເປີດເຜີຍ: David Trainer, Kyle Guske II, Matt Shuler, ແລະ Italo Mendonça ບໍ່ໄດ້ຮັບການຊົດເຊີຍທີ່ຈະຂຽນກ່ຽວກັບຫຼັກຊັບ, ແບບ, ຫຼືຫົວຂໍ້ສະເພາະໃດໆ.