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

Growth Factors this Past Quarter

Fastenal reported a 10% year-over-year increase in earnings per share on the back of decent margin growth. The company witnessed 8% year-over-year rise in revenues in the fourth quarter 2012. However, both revenue and earnings declined sequentially.

Fastenal’s daily sales growth rates in the second, third and fourth quarters of 2012 were lower than that of the first quarter as well as year-ago comparable periods mainly due to weakness in its fastener product line. Its fasteners product line has suffered due to end market slowdown and broader economic uncertainty.

Daily sales to manufacturing customers (representing almost 50% of revenues) grew 9.7% in the fourth quarter, much below growth rates of 21.0% in the prior-year quarter and 14.0% in the preceding quarter.

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 -5.41%.

Zacks Rank #3 (Hold): Fastenal’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks #3 Rank when combined with a negative ESP makes 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 they have the right combination of elements to post an earnings beat this quarter:

Ryland Group Inc. (RYL - Snapshot Report), Earnings ESP of + 10.00% and Zacks Rank #1 (Strong Buy)

The Home Depot, Inc. (HD - Analyst Report) , Earnings ESP of +7.90% and Zacks Rank #3 (Hold)

KB Home (KBH - Analyst Report), Earnings ESP of + 36.36% and Zacks Rank #2 (Buy)

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