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Fastenal (FAST) Q4 Earnings Beat, Revenues Miss Estimates
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Fastenal Company’s (FAST - Free Report) adjusted earnings of 40 cents per share in the fourth quarter of 2016 surpassed the Zacks Consensus Estimate of 38 cents by 5.3%. Earnings grew 2.6% year over year.
Sales Detail
Net sales of $947.95 million missed the Zacks Consensus Estimate of $951.35 million by 0.4%. Sales, however, increased 2.7% year over year.
Fastenal’s daily sales increased 2.7% in the fourth quarter of 2016, higher than a 1.8% increase in the third quarter. Foreign exchange hurt daily sales in the quarter by 0.2% while acquisitions contributed 0.2% to sales.
Fastenal’s sales, in the past few quarters, have been affected by price deflation of fastener products, currency headwinds and lack of new products and services. The top line has been dented by lower sales to manufacturing and construction customers due to overall weakness in the industrial economy.
On a monthly basis, daily sales increased 3.2% in December, 1.2% in November and 3.9% in October of 2016 compared to -3.8%, -1.1% and -0.8%, respectively, in December, November and October of 2015.
This industrial and construction supplies wholesale distributor serves customers in the manufacturing and non-residential construction markets. Daily sales to manufacturing customers (representing almost 50% of revenues) rose 3%, better than the 2.2% decline in the prior-year quarter and the 1% rise in the previous quarter.
The daily sales growth rate of fastener products (used mainly for industrial production and accounting for approximately 35--40% of the company’s business) declined 2.4% in the quarter, compared with a 6.2% drop in the year-ago quarter and a 2.9% decline in the previous quarter.
Price deflation of fasteners and lower demand from the heavy machinery manufacturing customer base -- due to lower production requirements -- has been denting fastener sales.
Non-fastener product sales (used mainly for maintenance) increased 5.9%, higher than 1.2% recorded in the year-ago quarter and 4.9% in the previous quarter. Though the non-fastener business is doing better than fasteners driven by strong vending trends, it has nonetheless weakened due to softness in the industrial environment.
In the non-residential construction market, daily sales to non-residential construction customers (representing 20% to 25% of revenues) declined 1.6% as compared with a 6.1% decrease in the prior-year quarter and a decline of 1.9% in the previous quarter. Volatility and softer energy prices impacted sales in this market.
Vending Trends
As of Dec 31, 2016, Fastenal operated 62,822 vending machines, up 13.2% year over year. During the quarter, the company signed 3,760 machine contracts, down 6.4% year over year.
After a soft 2013, vending trends improved through 2014 and 2015 as well as in 2016 as management’s efforts to enhance the quality of signings/installs paid off.
Margins Decline
Gross margin of 49.8% in the fourth quarter of 2016 declined 10 basis points (bps) year over year but improved 50 bps sequentially. Gross margin was hurt by an unfavorable customer mix and product mix.
Pre-tax earnings increased 1.5% to $180.8 million. Pre-tax margins declined 20 bps to 19.1% in the quarter.
Fiscal 2016 Results
Fastenal’s earnings of $1.73 per share in fiscal 2016 decreased 2.3% year over year but managed to beat the Zacks Consensus Estimate of $1.72 slightly. The company reported net sales of $3.96 billion, up 2.4% year over year. The net sales were almost on par with the Zacks Consensus Estimate of $3.97 billion.
Financials
Cash and cash equivalents were $112.7 million as of Dec 31, 2016, down from $129.0 million as on Dec 31, 2015. Long-term debt was $379.5 million, up from $302.9 million at 2015-end.
2017 Guidance
The company plans to continue to open stores in 2017 to sustain and improve its network and drive growth. Fastenal expects net capital expenditures at around $119 million in 2017, a decrease of $64 million or 35% from 2016.
Fastenal has a Zacks Rank #3 (Hold). Better -ranked stocks in the sector include Bob Evans Farms, Inc. , The Cheesecake Factory Inc. (CAKE - Free Report) and AutoZone, Inc. (AZO - Free Report) .
Bob Evans is expected to witness 10.9% growth in fiscal 2017 earnings. Cheesecake Factory -- Zacks Rank #2 (Buy) stock -- is expected to see earnings growth of 19.5% in 2016.
AutoZone, also a Zacks Rank #2 company, is expected to see earnings growth of 12.1% in fiscal 2017.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Fastenal (FAST) Q4 Earnings Beat, Revenues Miss Estimates
Fastenal Company’s (FAST - Free Report) adjusted earnings of 40 cents per share in the fourth quarter of 2016 surpassed the Zacks Consensus Estimate of 38 cents by 5.3%. Earnings grew 2.6% year over year.
Sales Detail
Net sales of $947.95 million missed the Zacks Consensus Estimate of $951.35 million by 0.4%. Sales, however, increased 2.7% year over year.
Fastenal’s daily sales increased 2.7% in the fourth quarter of 2016, higher than a 1.8% increase in the third quarter. Foreign exchange hurt daily sales in the quarter by 0.2% while acquisitions contributed 0.2% to sales.
Fastenal’s sales, in the past few quarters, have been affected by price deflation of fastener products, currency headwinds and lack of new products and services. The top line has been dented by lower sales to manufacturing and construction customers due to overall weakness in the industrial economy.
On a monthly basis, daily sales increased 3.2% in December, 1.2% in November and 3.9% in October of 2016 compared to -3.8%, -1.1% and -0.8%, respectively, in December, November and October of 2015.
This industrial and construction supplies wholesale distributor serves customers in the manufacturing and non-residential construction markets.
Daily sales to manufacturing customers (representing almost 50% of revenues) rose 3%, better than the 2.2% decline in the prior-year quarter and the 1% rise in the previous quarter.
The daily sales growth rate of fastener products (used mainly for industrial production and accounting for approximately 35--40% of the company’s business) declined 2.4% in the quarter, compared with a 6.2% drop in the year-ago quarter and a 2.9% decline in the previous quarter.
Price deflation of fasteners and lower demand from the heavy machinery manufacturing customer base -- due to lower production requirements -- has been denting fastener sales.
Non-fastener product sales (used mainly for maintenance) increased 5.9%, higher than 1.2% recorded in the year-ago quarter and 4.9% in the previous quarter. Though the non-fastener business is doing better than fasteners driven by strong vending trends, it has nonetheless weakened due to softness in the industrial environment.
In the non-residential construction market, daily sales to non-residential construction customers (representing 20% to 25% of revenues) declined 1.6% as compared with a 6.1% decrease in the prior-year quarter and a decline of 1.9% in the previous quarter. Volatility and softer energy prices impacted sales in this market.
Vending Trends
As of Dec 31, 2016, Fastenal operated 62,822 vending machines, up 13.2% year over year. During the quarter, the company signed 3,760 machine contracts, down 6.4% year over year.
After a soft 2013, vending trends improved through 2014 and 2015 as well as in 2016 as management’s efforts to enhance the quality of signings/installs paid off.
Margins Decline
Gross margin of 49.8% in the fourth quarter of 2016 declined 10 basis points (bps) year over year but improved 50 bps sequentially. Gross margin was hurt by an unfavorable customer mix and product mix.
Pre-tax earnings increased 1.5% to $180.8 million. Pre-tax margins declined 20 bps to 19.1% in the quarter.
Fiscal 2016 Results
Fastenal’s earnings of $1.73 per share in fiscal 2016 decreased 2.3% year over year but managed to beat the Zacks Consensus Estimate of $1.72 slightly. The company reported net sales of $3.96 billion, up 2.4% year over year. The net sales were almost on par with the Zacks Consensus Estimate of $3.97 billion.
Financials
Cash and cash equivalents were $112.7 million as of Dec 31, 2016, down from $129.0 million as on Dec 31, 2015. Long-term debt was $379.5 million, up from $302.9 million at 2015-end.
2017 Guidance
The company plans to continue to open stores in 2017 to sustain and improve its network and drive growth. Fastenal expects net capital expenditures at around $119 million in 2017, a decrease of $64 million or 35% from 2016.
Fastenal Co. Price, Consensus and EPS Surprise
Fastenal Co. Price, Consensus and EPS Surprise | Fastenal Co. Quote
Zacks Rank & Stocks to Consider
Fastenal has a Zacks Rank #3 (Hold). Better -ranked stocks in the sector include Bob Evans Farms, Inc. , The Cheesecake Factory Inc. (CAKE - Free Report) and AutoZone, Inc. (AZO - Free Report) .
Bob Evans carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Bob Evans is expected to witness 10.9% growth in fiscal 2017 earnings.
Cheesecake Factory -- Zacks Rank #2 (Buy) stock -- is expected to see earnings growth of 19.5% in 2016.
AutoZone, also a Zacks Rank #2 company, is expected to see earnings growth of 12.1% in fiscal 2017.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>