Earnings Preview: Fastenal Co. - Analyst Blog
July 11 2011 - 6:38AM
Zacks
Fastenal Co. (FAST) is scheduled to release its
second quarter 2011 results before the market opens on July 12,
2011.
Fastenal earned a profit of 54 cents per share in the first
quarter, which was higher than the Zacks Consensus Estimate of 51
cents per share.
For the upcoming quarter, the Zacks Consensus Estimate is 31
cents per share, which reflects an annualized improvement of 30%.
With respect
to earnings surprises, the company beat the Zacks Consensus
Estimate in two of the last four quarters, amassing an
average earnings surprise of
4.20%. It matched the
other two quarters.
First Quarter
Recap
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.
Fastenal’s first quarter
sales also exceeded the Zacks Consensus Estimate of $626 million.
During the quarter, daily sales to manufacturing customers
increased 15.5% and those to the non-residential construction
customers rose 17.7%.
Fastenal opened 37 stores
during the quarter, leading to a total of 2,522 stores as of March
31, 2011. The company intends to open 150 to 200 stores during
2011, equivalent to an annualized rate of 6.0% to 8.0%.
Fastenal recorded average
store sales of $74,400 per month during the 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 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.
Estimate Revisions
Trend
Earnings estimates for the
second quarter of fiscal 2011 is currently pegged at a profit of 31
cents per share. The current position of the North American
industrial, construction and maintenance supply industry keeps the
analysts cautious, although they are confident about the company's
management.
Agreement of
Estimate Revisions
Out of the 10 analysts
covering the stock for the second quarter of fiscal 2011, none have
reduced their estimates over the last 30 days, while one estimate
moved higher.
Magnitude of
Estimate Revisions
Following the first quarter
earnings release in April, the second quarter earnings per share
were projected at 29 cents per share. It has since moved to 31
cents per share.
Our
Take
Fastenal has a wide
customer base spanning various markets, which protect its market
position in tough economies. Furthermore, 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
threats 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.
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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