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Fastenal (FAST) to Post Q3 Earnings: What's in the Offing?

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Fastenal Company (FAST - Free Report) is scheduled to report third-quarter 2021 results on Oct 12, before the opening bell.

In the last reported quarter, although earnings and revenues topped the respective Zacks Consensus Estimate, net sales declined and earnings remained on par with the year-ago figure. Fastenal’s earnings topped the consensus mark in all the last four quarters, with the average being 2%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been unchanged at 41 cents over the past 60 days. The estimated figure indicates 7.9% growth from the year-ago level. The consensus mark for revenues is pegged at $1.54 billion, suggesting an 8.8% increase from the year-ago reported figure of $1.41 billion.

Fastenal Company Price and EPS Surprise

Fastenal Company Price and EPS Surprise

Fastenal Company price-eps-surprise | Fastenal Company Quote

Key Factors to Note

Sales: This national wholesale distributor of industrial and construction supplies is likely to have witnessed higher comps year over year in the third quarter, given higher manufacturing and construction demand.

If we go by the latest monthly sales report, August average daily sales or ADS grew 9% to $24.1 million compared with 9.7% growth registered in July 2021 and 2.5% in the year-ago period. Issues like price inflation, supply chain challenges and shortage of labor have been negatively impacting its growth rate. Although the company witnessed sequential moderation in August sales in its major end markets and key product categories, safety products registered improvements.

Meanwhile, Fastenal’s overall August sales of $531.1 million were up 14.2% year over year. For July, net sales growth was 4.7% for the company.

In terms of end markets/products/customers in August, manufacturing sales improved 19.7% for the month against a 5% decline a year ago. Non-residential construction grew 10.1% versus a 13.7% decrease reported in August 2020. The average daily sales growth rate in non-residential construction improved sequentially in August, while that of manufacturing end markets declined. Fastener sales were up 18.9% (versus a 24.4% increase in July). Safety sales decreased 3.8% for August versus a 5.4% decline in July. In terms of customer channel, national accounts were up 17% year over year, while non-national accounts declined 1%.

The Zacks Consensus Estimate for the company’s overall daily sales is pegged at $24.2 million, which indicates a sequential increase from $23.6 million and a year-over-year rise from $22.1 million.

Margins: Inflationary pressures have been a cause of concern. Although Fastener has seen a nominal impact from the same on first and second-quarter performances, the company highlighted the fact that it has been experiencing significant material cost inflation, particularly for steel, fuel as well as transportation. The company has been experiencing the adverse effects of tightening global and domestic supply chains. Management, during the second-quarter conference call, stated that gross margin will decline sequentially in the third quarter.

Yet, Fastenal has been successfully raising prices to offset inflationary pressures. The company has been undertaking additional steps to counter cost pressure and incremental tariffs, which are expected to reflect on the bottom line.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Fastenal this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: The company has an Earnings ESP of -0.97%. 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.

Stocks With Favorable Combination

Here are some 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.

AutoNation, Inc. (AN - Free Report) has an Earnings ESP of +2.92% and a Zacks Rank #1.

BJ's Restaurants, Inc. (BJRI - Free Report) has an Earnings ESP of +0.66% and holds a Zacks Rank #3.

Carvana Co. (CVNA - Free Report) has an Earnings ESP of +91.62% and a Zacks Rank #3.


In-Depth Zacks Research for the Tickers Above


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BJ's Restaurants, Inc. (BJRI) - free report >>

Fastenal Company (FAST) - free report >>

AutoNation, Inc. (AN) - free report >>

Carvana Co. (CVNA) - free report >>