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Fastenal (FAST) Gears Up for Q4 Earnings: What's in Store?
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Fastenal Company (FAST - Free Report) is scheduled to report fourth-quarter 2020 results on Jan 20, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 2.7% but sales missed the same by 0.3%. On a year-over-year basis, earnings and revenues grew 2.7% and 2.5%, respectively.
Fastenal’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 4.8%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to 33 cents from 32 cents over the past 60 days. The estimated figure indicates 6.5% growth from the year-ago level. Nonetheless, the consensus mark for revenues is pegged at $1.33 billion, suggesting a 4.3% increase from the year-ago reported figure of $1.28 billion.
Soft End-Market Demand: This national wholesale distributor of industrial and construction supplies is likely to have witnessed modest end-market demand in the holiday-impacted fourth quarter. Although the company experienced an improved sales environment, a slowdown in various end-markets served owing to slower global growth rate and trade war/geopolitical uncertainties is a concern. Underlying industrial demand is still quite below pre-COVID levels.
If we go by the monthly sales report, average daily sales or ADS grew 6.8% to $22.1 million in November 2020 compared with 4.1% growth registered in October 2020 and 5.7% in the year-ago period. November 2020 growth was based on strength in safety (35.9% improvement) despite a 1.7% dip in fastener sales.
In terms of region, for the month of November, U.S. sales grew 5.4%, Canada/Mexico sales grew 9.7% and “rest of world” sales grew 28.7% year over year. By end market, manufacturing sales increased 1.4%, while non-residential construction sales decreased 10.2%, as stated by the company. Safety sales continued to drive the company’s top line, which increased 35.9% from the prior-year period. However, fasteners declined 1.7% and “other” improved 1.7% from a year ago.
Hence, from an end-market perspective, sales of manufacturing and safety products are expected to have offset the above-mentioned negatives to some extent, as is evident from the monthly sales report.
From product lines perspective, the monthly sales data reflects that fasteners sales trend has improved. After plunging 22.5% in April, the figure was down 15.3%, 11.4%, 7.5%, 7.3%, 6.1%, 4.7% and 1.7% in May, June, July, August, September, October, and November, respectively.
The Zacks Consensus Estimate for the company’s overall daily sales is pegged at $20.9 million, which indicates a sequential decrease of 5.6% but year-over-year growth of 2.8%.
Margins Under Pressure: Fastenal’s changes in product and customer mix have been hurting gross margin for quite some time now. Negative customer/product mix — as a result of increased growth of lower-margin national accounts and safety products — along with lower proportion of higher-margin fasteners are expected to have affected its fourth-quarter gross margin.
To offset the tariffs placed on products sourced from China to date, Fastenal has been successfully raising prices. However, those increases were not sufficient to counter general inflation in the marketplace. Although the company has been undertaking additional steps to counter cost pressure and incremental tariffs, the above-mentioned headwinds are likely to have put pressure on the bottom line.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Fastenal in the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the changes of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +4.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Fastenal carries a Zacks Rank #2.
Here are some other companies in the Zacks Retail-Wholesale sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Advance Auto Parts, Inc. (AAP - Free Report) has an Earnings ESP of +3.82% and a Zacks Rank #3.
American Eagle Outfitters, Inc. (AEO - Free Report) has an Earnings ESP of +8.27% and holds a Zacks Rank #3.
AutoZone, Inc. (AZO - Free Report) has an Earnings ESP of +4.50% and a Zacks Rank #3.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Fastenal (FAST) Gears Up for Q4 Earnings: What's in Store?
Fastenal Company (FAST - Free Report) is scheduled to report fourth-quarter 2020 results on Jan 20, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 2.7% but sales missed the same by 0.3%. On a year-over-year basis, earnings and revenues grew 2.7% and 2.5%, respectively.
Fastenal’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 4.8%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to 33 cents from 32 cents over the past 60 days. The estimated figure indicates 6.5% growth from the year-ago level. Nonetheless, the consensus mark for revenues is pegged at $1.33 billion, suggesting a 4.3% increase from the year-ago reported figure of $1.28 billion.
Fastenal Company Price and EPS Surprise
Fastenal Company price-eps-surprise | Fastenal Company Quote
Key Factors to Note
Soft End-Market Demand: This national wholesale distributor of industrial and construction supplies is likely to have witnessed modest end-market demand in the holiday-impacted fourth quarter. Although the company experienced an improved sales environment, a slowdown in various end-markets served owing to slower global growth rate and trade war/geopolitical uncertainties is a concern. Underlying industrial demand is still quite below pre-COVID levels.
If we go by the monthly sales report, average daily sales or ADS grew 6.8% to $22.1 million in November 2020 compared with 4.1% growth registered in October 2020 and 5.7% in the year-ago period. November 2020 growth was based on strength in safety (35.9% improvement) despite a 1.7% dip in fastener sales.
In terms of region, for the month of November, U.S. sales grew 5.4%, Canada/Mexico sales grew 9.7% and “rest of world” sales grew 28.7% year over year. By end market, manufacturing sales increased 1.4%, while non-residential construction sales decreased 10.2%, as stated by the company. Safety sales continued to drive the company’s top line, which increased 35.9% from the prior-year period. However, fasteners declined 1.7% and “other” improved 1.7% from a year ago.
Hence, from an end-market perspective, sales of manufacturing and safety products are expected to have offset the above-mentioned negatives to some extent, as is evident from the monthly sales report.
From product lines perspective, the monthly sales data reflects that fasteners sales trend has improved. After plunging 22.5% in April, the figure was down 15.3%, 11.4%, 7.5%, 7.3%, 6.1%, 4.7% and 1.7% in May, June, July, August, September, October, and November, respectively.
The Zacks Consensus Estimate for the company’s overall daily sales is pegged at $20.9 million, which indicates a sequential decrease of 5.6% but year-over-year growth of 2.8%.
Margins Under Pressure: Fastenal’s changes in product and customer mix have been hurting gross margin for quite some time now. Negative customer/product mix — as a result of increased growth of lower-margin national accounts and safety products — along with lower proportion of higher-margin fasteners are expected to have affected its fourth-quarter gross margin.
To offset the tariffs placed on products sourced from China to date, Fastenal has been successfully raising prices. However, those increases were not sufficient to counter general inflation in the marketplace. Although the company has been undertaking additional steps to counter cost pressure and incremental tariffs, the above-mentioned headwinds are likely to have put pressure on the bottom line.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Fastenal in the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the changes of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +4.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Fastenal carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Here are some other companies in the Zacks Retail-Wholesale sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Advance Auto Parts, Inc. (AAP - Free Report) has an Earnings ESP of +3.82% and a Zacks Rank #3.
American Eagle Outfitters, Inc. (AEO - Free Report) has an Earnings ESP of +8.27% and holds a Zacks Rank #3.
AutoZone, Inc. (AZO - Free Report) has an Earnings ESP of +4.50% and a Zacks Rank #3.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>