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Fastenal (FAST) Down 1.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Fastenal (FAST - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fastenal due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fastenal Company’s fourth-quarter 2020 earnings topped the Zacks Consensus Estimate, courtesy of higher demand for PPE products.
Earnings & Sales in Detail
The company reported earnings of 34 cents per share, which beat the consensus mark of 33 cents. The reported figure also increased 9.6% from the year-ago profit level of 31 cents per share.
Net sales for the reported period were $1,358 million, beating the consensus mark of $1,331 million by 2% and increasing 6.4% from the year-ago figure of $1,276.9 million. The upside was due to higher unit sales of safety and janitorial products.
It reported daily sales growth of 6.4%, higher than 2.5% increase in third-quarter 2020 and 3.7% in the year-ago period.
On a monthly basis, daily sales improved 9.3%, 6.8% and 4.1% in December, November and October compared with 1%, 5.7% and 4.3% growth, respectively, in the comparable months of the prior year.
Daily sales of Fastener products (mainly used for industrial production and accounting for 30.8% of fourth-quarter sales) declined 2.3% year over year. This reflects persistent softness in manufacturing and construction markets. Nonetheless, the metric improved from the third quarter’s decline of 6.9%.
Sales of safety products (accounting for 23.5% of fourth-quarter sales) grew 34.6% on a daily basis. Sales of the remaining products (accounting for 45.7% of fourth-quarter sales) grew 2.1% year over year on a daily basis.
Vending Trends and Other Growth Drivers
As of Dec 31, 2020, Fastenal operated 95,733 vending machines, up 6.4% year over year. During 2020, the company signed 16,417 machine contracts, down from 21,857 reported in the year-ago period.
Daily sales through vending devices grew at a low-to-mid single-digit pace in the fourth quarter of 2020 on a year-over-year basis.
Fastenal signed 223 new Onsite locations during 2020. The figure was 362 in 2019. As of Dec 31, 2020, the company had 1,265 active sites, up 13.6% from the comparable year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) increased at a low single-digit rate in the fourth quarter of 2020 from a year ago. This resumption of growth reflects increasing sales in relatively new active locations as implementations progress, combined with moderating rates of contraction in more mature sites. It expects Onsite signings between 375 and 400 for 2021.
Daily sales to national account customers (representing 55.9% of total revenues) increased 7.8% on a year-over-year basis for fourth-quarter 2020.
Margins
Gross margin of 45.6% increased 30 basis points (bps) from the prior-year period, mainly attributable to pricing actions taken during fourth-quarter 2020 for certain PPE and safety supplies. Also, cost-saving efforts added to the positives.
Nonetheless, operating margin expanded 80 bps year over year to 19.5% for the quarter. Operating and administrative expenses (including gains from sales of property and equipment) — as a percentage of net sales — declined 210 bps year over year to 26.1% for fourth-quarter 2020, owing to the company’s ability to leverage employee as well as general corporate expenses, courtesy of higher sales.
Financials
Cash and cash equivalents were $245.7 million as of Dec 31, 2020, up from $174.9 million on Dec 31, 2019. Long-term debt at 2020-end was $365 million, up from $342 million at 2019-end. In 2020, cash provided by operating activities totaled $1,101.8 million, up from $842.7 million in the prior year. Fastenal returned $803.4 in dividends to shareholders in 2020 compared with $498.6 a year ago.
2020 Highlights
Earnings came in at $1.49 per share, up 8.4% from $1.38 a year ago. Net sales were $5,647.3 million, up 5.9% from $5,333.7 million a year ago.
The company expects net capital expenditures for 2021 within $170-$200, indicating an increase from $157.5 in 2020. This increase can be attributed to higher spending for a non-hub construction project in Winona to support growth, increased maintenance spending across most tracked categories following tighter spending control in 2020 and lower anticipated proceeds from asset sales.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Fastenal has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Fastenal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fastenal (FAST) Down 1.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Fastenal (FAST - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fastenal due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fastenal (FAST - Free Report) Q4 Earnings and Revenues Beat Estimates
Fastenal Company’s fourth-quarter 2020 earnings topped the Zacks Consensus Estimate, courtesy of higher demand for PPE products.
Earnings & Sales in Detail
The company reported earnings of 34 cents per share, which beat the consensus mark of 33 cents. The reported figure also increased 9.6% from the year-ago profit level of 31 cents per share.
Net sales for the reported period were $1,358 million, beating the consensus mark of $1,331 million by 2% and increasing 6.4% from the year-ago figure of $1,276.9 million. The upside was due to higher unit sales of safety and janitorial products.
It reported daily sales growth of 6.4%, higher than 2.5% increase in third-quarter 2020 and 3.7% in the year-ago period.
On a monthly basis, daily sales improved 9.3%, 6.8% and 4.1% in December, November and October compared with 1%, 5.7% and 4.3% growth, respectively, in the comparable months of the prior year.
Daily sales of Fastener products (mainly used for industrial production and accounting for 30.8% of fourth-quarter sales) declined 2.3% year over year. This reflects persistent softness in manufacturing and construction markets. Nonetheless, the metric improved from the third quarter’s decline of 6.9%.
Sales of safety products (accounting for 23.5% of fourth-quarter sales) grew 34.6% on a daily basis. Sales of the remaining products (accounting for 45.7% of fourth-quarter sales) grew 2.1% year over year on a daily basis.
Vending Trends and Other Growth Drivers
As of Dec 31, 2020, Fastenal operated 95,733 vending machines, up 6.4% year over year. During 2020, the company signed 16,417 machine contracts, down from 21,857 reported in the year-ago period.
Daily sales through vending devices grew at a low-to-mid single-digit pace in the fourth quarter of 2020 on a year-over-year basis.
Fastenal signed 223 new Onsite locations during 2020. The figure was 362 in 2019. As of Dec 31, 2020, the company had 1,265 active sites, up 13.6% from the comparable year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) increased at a low single-digit rate in the fourth quarter of 2020 from a year ago. This resumption of growth reflects increasing sales in relatively new active locations as implementations progress, combined with moderating rates of contraction in more mature sites. It expects Onsite signings between 375 and 400 for 2021.
Daily sales to national account customers (representing 55.9% of total revenues) increased 7.8% on a year-over-year basis for fourth-quarter 2020.
Margins
Gross margin of 45.6% increased 30 basis points (bps) from the prior-year period, mainly attributable to pricing actions taken during fourth-quarter 2020 for certain PPE and safety supplies. Also, cost-saving efforts added to the positives.
Nonetheless, operating margin expanded 80 bps year over year to 19.5% for the quarter. Operating and administrative expenses (including gains from sales of property and equipment) — as a percentage of net sales — declined 210 bps year over year to 26.1% for fourth-quarter 2020, owing to the company’s ability to leverage employee as well as general corporate expenses, courtesy of higher sales.
Financials
Cash and cash equivalents were $245.7 million as of Dec 31, 2020, up from $174.9 million on Dec 31, 2019. Long-term debt at 2020-end was $365 million, up from $342 million at 2019-end. In 2020, cash provided by operating activities totaled $1,101.8 million, up from $842.7 million in the prior year. Fastenal returned $803.4 in dividends to shareholders in 2020 compared with $498.6 a year ago.
2020 Highlights
Earnings came in at $1.49 per share, up 8.4% from $1.38 a year ago. Net sales were $5,647.3 million, up 5.9% from $5,333.7 million a year ago.
The company expects net capital expenditures for 2021 within $170-$200, indicating an increase from $157.5 in 2020. This increase can be attributed to higher spending for a non-hub construction project in Winona to support growth, increased maintenance spending across most tracked categories following tighter spending control in 2020 and lower anticipated proceeds from asset sales.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Fastenal has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Fastenal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.