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Stocks residing in the Zacks Building Products – Retail industry have undergone adverse price action year-to-date. The image below shows the performance of the industry across multiple timeframes while compared to the S&P 500.
Image Source: Zacks Investment Research
However, the industry is ranked within the top 19% of all Zacks Industries. Due to its favorable industry ranking, we expect it to outperform the general market over the next three to six months.
One such company residing within the sector is Fastenal (FAST - Free Report) , a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores.
In addition, FAST is a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
FAST reports quarterly results on Wednesday before the market opens. Let’s examine the company closely to see how things shape up heading into the quarterly report.
Share Performance & Valuation
FAST shares have undergone a double-digit valuation slash in 2022, retreating more than 20% in value and slightly underperforming the general market.
Image Source: Zacks Investment Research
The picture changes noticeably upon expanding the timeframe to cover a year’s worth of price action. Fastenal shares have declined close to 5% in this timeframe, penciling in a much stronger performance than the S&P 500.
Image Source: Zacks Investment Research
Fastenal’s forward earnings multiple resides on the steep side at 26.8X, modestly above its five-year median value of 26.2X but nicely below 2021 highs of 40.9X. Additionally, shares trade at a pricey 78% premium relative to its Zacks Industry.
Quarterly Performance
Fastenal has consistently reported better-than-expected bottom-line results, exceeding EPS expectations in eight of its last ten quarterly reports. Over its last four quarters, the company has beat EPS estimates by an average of 5%, and in its latest quarter, FAST beat the Zacks Consensus EPS Estimate by a respectable 7%.
Fastenal’s top-line results have also been primarily solid, exceeding revenue estimates in seven of its last ten quarters. The chart below illustrates the company’s revenue trend on a quarterly basis.
Image Source: Zacks Investment Research
The market generally reacts to EPS beats poorly; shares have moved upwards just once over its last six EPS beats. It appears that a hefty bottom-line beat would be needed to fuel shares for a post-earnings rally.
Growth Estimates
For the quarter to be reported, the Zacks Consensus Revenue Estimate resides at $1.8 billion, which would pencil in a double-digit revenue growth of nearly 20% from the year-ago quarter.
Pivoting to the bottom-line, the quarterly EPS estimate of $0.50 reflects a notable 19% growth in quarterly earnings year-over-year. Additionally, over the last 60 days, the Consensus Estimate trend has remained unchanged.
Bottom Line
Fastenal has primarily reported quarterly results above expectations on both the top and bottom-line in the recent term.
Additionally, quarterly earnings and revenue are both forecasted to climb double-digit percentages year-over-year. Margin compression caused by supply-chain disruptions and soaring material costs are a concern, but the company has utilized its pricing power in order to offset the costs.
Valuation levels appear stretched, and the market has generally reacted poorly to bottom-line beats. For these reasons, I believe investors should heed caution heading into the quarterly report.
For investors seeking exposure to the industry, a solid bet would be Builders FirstSource (BLDR - Free Report) . The company has witnessed positive estimate revisions across the board over the last 60 days, helping push it into a Zacks Rank #2 (Buy). Additionally, BLDR sports an overall VGM Score of an A.
Image Source: Zacks Investment Research
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Fastenal Q2 Preview: Can Shares Find New Life?
Stocks residing in the Zacks Building Products – Retail industry have undergone adverse price action year-to-date. The image below shows the performance of the industry across multiple timeframes while compared to the S&P 500.
Image Source: Zacks Investment Research
However, the industry is ranked within the top 19% of all Zacks Industries. Due to its favorable industry ranking, we expect it to outperform the general market over the next three to six months.
One such company residing within the sector is Fastenal (FAST - Free Report) , a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores.
In addition, FAST is a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
FAST reports quarterly results on Wednesday before the market opens. Let’s examine the company closely to see how things shape up heading into the quarterly report.
Share Performance & Valuation
FAST shares have undergone a double-digit valuation slash in 2022, retreating more than 20% in value and slightly underperforming the general market.
Image Source: Zacks Investment Research
The picture changes noticeably upon expanding the timeframe to cover a year’s worth of price action. Fastenal shares have declined close to 5% in this timeframe, penciling in a much stronger performance than the S&P 500.
Image Source: Zacks Investment Research
Fastenal’s forward earnings multiple resides on the steep side at 26.8X, modestly above its five-year median value of 26.2X but nicely below 2021 highs of 40.9X. Additionally, shares trade at a pricey 78% premium relative to its Zacks Industry.
Quarterly Performance
Fastenal has consistently reported better-than-expected bottom-line results, exceeding EPS expectations in eight of its last ten quarterly reports. Over its last four quarters, the company has beat EPS estimates by an average of 5%, and in its latest quarter, FAST beat the Zacks Consensus EPS Estimate by a respectable 7%.
Fastenal’s top-line results have also been primarily solid, exceeding revenue estimates in seven of its last ten quarters. The chart below illustrates the company’s revenue trend on a quarterly basis.
Image Source: Zacks Investment Research
The market generally reacts to EPS beats poorly; shares have moved upwards just once over its last six EPS beats. It appears that a hefty bottom-line beat would be needed to fuel shares for a post-earnings rally.
Growth Estimates
For the quarter to be reported, the Zacks Consensus Revenue Estimate resides at $1.8 billion, which would pencil in a double-digit revenue growth of nearly 20% from the year-ago quarter.
Pivoting to the bottom-line, the quarterly EPS estimate of $0.50 reflects a notable 19% growth in quarterly earnings year-over-year. Additionally, over the last 60 days, the Consensus Estimate trend has remained unchanged.
Bottom Line
Fastenal has primarily reported quarterly results above expectations on both the top and bottom-line in the recent term.
Additionally, quarterly earnings and revenue are both forecasted to climb double-digit percentages year-over-year. Margin compression caused by supply-chain disruptions and soaring material costs are a concern, but the company has utilized its pricing power in order to offset the costs.
Valuation levels appear stretched, and the market has generally reacted poorly to bottom-line beats. For these reasons, I believe investors should heed caution heading into the quarterly report.
For investors seeking exposure to the industry, a solid bet would be Builders FirstSource (BLDR - Free Report) . The company has witnessed positive estimate revisions across the board over the last 60 days, helping push it into a Zacks Rank #2 (Buy). Additionally, BLDR sports an overall VGM Score of an A.
Image Source: Zacks Investment Research