Fastenal Beats Estimates - Analyst Blog
April 12 2011 - 9:21AM
Zacks
Fastenal Co. (FAST) reported a profit of $79.5
million in the first quarter of 2011, up 42% from $56.0 million in
the year-ago quarter. This translates into earnings of 54 cents per
share, which has surpassed the year-ago earnings of 38 cents per
share by 42.1%. Reported earnings also beat the Zacks Consensus
Estimate of 51 cents per share.
Net sales for the quarter totaled $640.6 million, up 23% year
over year driven by an improvement in sales to the company’s
manufacturing customers as well as non-residential construction
customers of the company.
Fastenal’s first quarter sales also exceeded the Zacks Consensus
Estimate of $626 million. During the quarter, daily sales to the
manufacturing customers increased 15.5% and that to the
non-residential construction customers rose 17.7%.
During the quarter, Fastenal opened 37 stores, leading to a
total of 2,522 stores as of March 31, 2011. The company intends to
open 150 to 200 stores during 2011, which is equivalent to an
annualized rate of 6.0% to 8.0%.
Fastenal recorded average store sales of $74,400 per month in
this quarter versus $62,700 per month in the first quarter of 2010.
The company aims to push its average store sales to $125,000 per
month going forward.
Gross profit rose 25.4% to $333.4 million in the quarter from
$265.9 million in the prior year. However, gross margin spiked
marginally to 52.0% from 51.1% in the corresponding quarter of
2010.
Dividend Payment
Fastenal announced to pay a cash dividend of 26 cents per share
on April 28, 2011 to shareholders of record at the close of
business as of April 12, 2011.
Financial Position
Fastenal had cash and cash equivalents of $124.8 million as of
March 31, 2011, compared with $178.8 million as of March 31, 2010.
Inventories were $576.5 million compared with $507.2 million at the
end of the first quarter in 2010.
During the first three months of 2010, net cash provided by
operating activities was $74.3 million, down from $79 million in
the prior-year period. The failure to generate cash flow was
attributed to increases in trade accounts receivable and
inventories.
Our Take
Fastenal has a wide customer base spanning across various
markets, which protects its market position in tough economies.
Further, it has employed a hub and spoke model along with the
opening of new stores and service centers to ensure efficient
customer service in all aspects.
However, the fluctuations in diesel fuel and gasoline prices may
pose considerable threat to the company’s margins in the coming
quarters. Taking into account the above conditions, we have a
long-term Neutral recommendation on the stock.
Based in Winona, Minnesota, Fastenal is a leading national
distributor of industrial and construction supplies and operates
stores in Canada, Mexico, the Dominican Republic, Puerto Rico,
Singapore, China, and in all the 50 states in the U.S. The
company’s key competitors include MSC Industrial Direct Co.
Inc. (MSM), W.W. Grainger, Inc. (GWW) and
The Home Depot, Inc. (HD).
FASTENAL (FAST): Free Stock Analysis Report
GRAINGER W W (GWW): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
MSC INDL DIRECT (MSM): Free Stock Analysis Report
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