Snap-on (SNA) vs. Barnes Group (B) Critical Comparison

Barnes Group (NYSE: B) and Snap-on (NYSE:SNA) are both mid-cap industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Barnes Group 11.20% 12.44% 6.96%
Snap-on 15.13% 20.54% 11.60%

Institutional & Insider Ownership

86.2% of Barnes Group shares are held by institutional investors. Comparatively, 99.0% of Snap-on shares are held by institutional investors. 8.5% of Barnes Group 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 endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Barnes Group and Snap-on, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barnes Group 0 3 3 0 2.50
Snap-on 0 2 6 0 2.75

Barnes Group currently has a consensus price target of $67.00, suggesting a potential upside of 11.06%. Snap-on has a consensus price target of $194.00, suggesting a potential upside of 21.82%. Given Snap-on’s stronger consensus rating and higher possible upside, analysts plainly believe Snap-on is more favorable than Barnes Group.

Dividends

Barnes Group pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Snap-on pays an annual dividend of $3.28 per share and has a dividend yield of 2.1%. Barnes Group pays out 19.7% of its earnings in the form of a dividend. Snap-on pays out 34.5% 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. Barnes Group has increased its dividend for 5 consecutive years and 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.

Valuation and Earnings

This table compares Barnes Group and Snap-on’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barnes Group $1.23 billion 2.63 $135.60 million $2.84 21.24
Snap-on $3.69 billion 2.46 $557.70 million $9.51 16.75

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

Risk and Volatility

Barnes Group has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Snap-on has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Summary

Snap-on beats Barnes Group on 12 of the 17 factors compared between the two stocks.

Barnes Group Company Profile

Barnes Group Inc. is an industrial and aerospace manufacturer and service provider, serving a range of end markets and customers. The Company’s engineered products, industrial technologies, and solutions are used in applications that provide transportation, manufacturing, healthcare products and technology to the world. Its segments include Industrial and Aerospace. The Industrial segment is engaged in the manufacturing of precision parts, products and systems for applications serving a customer base in end-markets, such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices and energy. The Industrial segment includes the Molding Solutions, Nitrogen Gas Products and Engineered Components business units. The Aerospace segment includes the original equipment manufacturer (OEM) business and the aftermarket business, which includes maintenance repair and overhaul services and the manufacture and delivery of aerospace aftermarket spare parts.

Snap-on Company Profile

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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