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Fastenal Company (FAST - Analyst Report) is set to report second quarter 2013 results before the opening bell on Jul 10. Last quarter it posted in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider

Fastenal’s daily sales growth rates have declined sharply in the last 3 - 4 quarters due to end market slowdown. Also, daily sales growth rates in the first quarter of 2013 were hurt by unfavorable weather conditions in January and February and an extended holiday shutdown in January. Daily sales growth of 4.8% in April was also disappointing.

Moreover, on June 5, Fastenal reported drastic year-over-year decline in daily sales for May 2013. Fastenal’s daily sales growth rates came in at 5.3% for the month of May, significantly down from 13.1% in the corresponding prior-year month.

The declining daily sales rates have been due to lower sales of its fasteners product line, overall weak non-residential construction market and the uncertainty in U.S economic policy.

Following the release of its disappointing May sales information, Fastenal witnessed downward movement of estimates in the past 30 days. The Zacks Consensus Estimate for fiscal 2013 declined 0.6% to $1.59 over the last 30 days whereas the same for fiscal 2014 declined 0.5% to $1.85 over the same time frame.

Earnings Whispers?

Our proven model does not conclusively show that Fastenal is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The stock has a negative ESP of -2.44%.

Zacks Rank #4 (Sell ): Fastenal’s Zacks Rank #4 when combined with a negative ESP makes positive surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

With the overall housing market improving steadily, there are many companies that are likely to beat earnings this quarter. Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Ryland Group Inc. (RYL - Snapshot Report), Earnings ESP of + 4.69% and Zacks Rank #1 (Strong Buy).

DR Horton Inc. (DHI - Analyst Report), Earnings ESP of + 8.57% and Zacks Rank #1 (Strong Buy).

The Home Depot, Inc. (HD - Analyst Report) , Earnings ESP of +1.68% and Zacks Rank #2 (Buy).

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