Business Breakdowns
· Matt Reustle, Matt Fleming
[00:00:00] S0: If I'm asking you to make an assumption on those other names and why they would trade where they do versus Snap-on, is it the finance business? Is it the growth characteristics of those businesses? Is there something that would be the easy explanation of the valuation gap between them? [00:00:00] S1: If I had to guess, it's probably the consumable element, when I look at those welding companies. I think the finance business is misunderstood for Snap-on, so I do think that plays a role. For a very significant company in terms of brand and recognition, for an $18 billion market cap company, there's surprisingly little sell-side coverage. There's nine analysts who cover this name. That's actually as high as it's ever been. It is a little unusual for a company of this size and stature. [00:00:00] S0: Absolutely. I think it's not a household name, which is quite interesting. And when I saw the market cap, I was quite surprised. A lot of people know the other SNAP that trades in the market and they couldn't be two more different businesses. [00:00:00] S1: Not a lot of overlap I think in that investor base. [00:00:00] S0: No, I would agree. Well, this has been a fascinating discussion. I have learned so much. Thank you for explaining it in so many different ways. We close these out with the lessons that you can take away from a business and potentially apply elsewhere. What stands out for Snap-on?
· Matt Reustle, Matt Fleming
[00:00:00] S0: No, I would agree. Well, this has been a fascinating discussion. I have learned so much. Thank you for explaining it in so many different ways. We close these out with the lessons that you can take away from a business and potentially apply elsewhere. What stands out for Snap-on? [00:00:00] S1: Well, I think there's five. And one is that I think it's a great lesson to identify end markets where there's a natural demand. In this case we're talking about that automotive turnover, we're talking about the value of the tool to the technician, and secular tailwinds. Number two, I would say innovate differentiated products that can command brand loyalty and a price premium. So we talked a lot about innovation and their loyal customer base. Three, have that value-added unique distribution. I think you can really see the impact that's had on the tools margin and really the value to the consumer. Fourth, I think the continuous improvement speaks for itself, and the margin improvement in the tools business. And then finally, leadership matters. It really starts at the top. And Nick Pinchuk I think is an iconic CEO. There's some obviously well-known other CEOs out there, and I think Nick's name is not always mentioned with them, but it probably should be. I would say those are my five lessons. [00:00:00] S0: Excellent. An excellent way to close it out. Thank you very much Matt for sharing the knowledge.