Snap-on IncorporatedSNANYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Buy

Fair Value: $451.05 per share(market-calibrated)

+15.8%

Upside to Fair Value

Current

$389.59

Pure Model

$452.90

Fair Value

$451.05

Bull Case

$513.62

Bear Case

$396.12

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

1.71%

Calibrated Growth

2.17%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $452.90.

What's Driving This Ratingfor SNA

✓

CapEx already efficient

CapEx at 1.59% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 29.93% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -7.95% revenue growth, fading to 2.25% by Year 10. Revenue reaches $6.2B (vs $5.2B today).

✓

Model and market roughly agree

Market-implied terminal growth of 1.71% is close to the model's 2.25% (only 54bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 72.32% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (23.05% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.79

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.04%

Cost of Debt

Pre-tax Cost of Debt3.80%

Tax Rate21.98%

After-tax Cost of Debt2.96%

Equity Weight (E/V)93.87%

Debt Weight (D/V)6.13%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (93.87% × 8.04%) + (6.13% × 2.96%)

= 7.73%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$4.7B	$5.1B	$5.5B	$5.8B	$6.2B
EBIT	$1.4B	$1.5B	$1.7B	$1.7B	$1.9B
Tax	$312M	$334M	$364M	$380M	$407M
NOPAT	$1.1B	$1.2B	$1.3B	$1.4B	$1.4B
+ Depreciation	$92M	$99M	$107M	$112M	$120M
- Capex	$75M	$80M	$88M	$92M	$98M
- Δ NWC	-$123M	$54M	$37M	$38M	$41M
Free Cash Flow	$1.2B	$1.1B	$1.3B	$1.3B	$1.4B
Discount Factor	0.928	0.800	0.689	0.594	0.475
Present Value	$1.2B	$919M	$879M	$792M	$677M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate2.25%

WACC7.73%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$26.6B

PV of Terminal Value$12.6B

Exit Multiple Method

Year 10 EBITDA$2.0B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$35.5B

PV of Terminal Value$16.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.6B

PV of Terminal Value$12.6B

Enterprise Value$21.2B

(-) Net Debt-$298M

Equity Value$21.5B

Shares Outstanding52M

Price per Share$412.42

Exit Multiple Method

PV of Projected FCFs$8.6B

PV of Terminal Value$16.8B

Enterprise Value$25.4B

(-) Net Debt-$298M

Equity Value$25.7B

Shares Outstanding52M

Price per Share$493.38

Pure Model Fair Value

$452.90

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
5.73%	$558.74	$581.97	$611.87	$651.80	$707.83
6.73%	$487.28	$501.22	$518.27	$539.61	$567.08
7.73%	$433.20	$442.23	$452.90	$465.72	$481.40
8.73%	$390.13	$396.29	$403.41	$411.72	$421.54
9.73%	$354.62	$359.00	$363.97	$369.65	$376.20

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$396.12

1.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.98

Base Case

$452.90

16.3% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 0.79

Bull Case

$513.62

31.8% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.67

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-7.95%

Year 3 Revenue Growth3.69%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin29.93%

Tax Rate21.98%

Historical Capex / Rev1.59%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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