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In the last reported quarter, earnings and net sales topped the Zacks Consensus Estimate by 6.1% and 0.9%, respectively. Earnings and net sales increased 10.4% and 9.1% from the year-ago figures, respectively. Fastenal’s earnings topped the consensus mark in all the last four quarters, with the average being 3.2%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has decreased to 52 cents from 53 cents over the past 60 days. The estimated figure indicates 4% growth from the year-ago level. The consensus mark for revenues is pegged at $1.89 billion, suggesting a 6% increase from the year-ago reported figure of $1.78 billion.
Sales: Fastenal’s industrial markets have been slowing down broadly due to decreased customer spending. However, the company has several factors working in its favor that are expected to have driven its growth. These include a significant number of large customers, a strong digital strategy, a balanced mix of onsite and offsite services and market share gains across various product categories. Despite challenging comparisons to the previous year, Fastenal's positive attributes are anticipated to have driven its growth.
If we go by the latest monthly sales report, May’s average daily sales grew 5.2% to $29.5 million, moderating from 7.8% growth in April 2023. The metric witnessed 17.6% growth in May 2022.
In terms of end markets/products/customers in May and April 2023, manufacturing sales improved 9.7% and 13% from the year-ago months, respectively. Non-residential construction declined 9.5% in May and 8.2% in April 2023.
Fastener sales were down 0.6% in May (against a 1.2% increase in April 2023). Safety sales increased 6.8% in May compared with 10.1% growth in April 2023. In terms of customer channel, national accounts were up 9% year over year in May (compared with a 13% increase in April 2023), while non-national accounts growth remained unchanged from the year-ago level (compared with a 1% rise in April 2023).
Our model predicts Fastenal’s overall daily sales to be $29.2 million for the second quarter, indicating an increase from $27.8 million reported a year ago and from $29 million in the prior quarter.
Margins: Steel and freight expenses continue to decline. The company is focused on maintaining a balance between pricing and declining costs, aiming to eliminate any negative impact on the full-year margin.
The negative impact from the customer and product mix, high growth in the lower margin of Onsite and non-fastener products and lower product margins in certain other product categories are likely to have been headwinds. Also, more overhead costs and supply chain headwinds are expected to have weighed on the company’s margins.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for FAST this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. 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 #3.
Stocks With the Favorable Combination
Here are some companies which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Builders FirstSource, Inc. (BLDR - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1.
BLDR’s earnings topped the consensus mark in all the last four quarters, with the average being 68.3%. Earnings for the to-be-reported quarter are expected to decrease 58.5% year over year.
BLD’s earnings topped the consensus mark in all the last four quarters, with the average being 12.9%. Earnings for the to-be-reported quarter are expected to drop 1.6% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +5.02% and a Zacks Rank #3.
FND’s earnings topped the consensus mark in three the last four quarters but missed in one occasion, with the average being 4.8%. Earnings for the to-be-reported quarter are expected to decline 13.2% year over year.
Image: Bigstock
Fastenal (FAST) to Report Q2 Earnings: What's in the Cards?
Fastenal Company (FAST - Free Report) is scheduled to report second-quarter 2023 results on Jul 13, before the opening bell.
In the last reported quarter, earnings and net sales topped the Zacks Consensus Estimate by 6.1% and 0.9%, respectively. Earnings and net sales increased 10.4% and 9.1% from the year-ago figures, respectively. Fastenal’s earnings topped the consensus mark in all the last four quarters, with the average being 3.2%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has decreased to 52 cents from 53 cents over the past 60 days. The estimated figure indicates 4% growth from the year-ago level. The consensus mark for revenues is pegged at $1.89 billion, suggesting a 6% increase from the year-ago reported figure of $1.78 billion.
Fastenal Company Price and EPS Surprise
Fastenal Company price-eps-surprise | Fastenal Company Quote
Key Factors to Note
Sales: Fastenal’s industrial markets have been slowing down broadly due to decreased customer spending. However, the company has several factors working in its favor that are expected to have driven its growth. These include a significant number of large customers, a strong digital strategy, a balanced mix of onsite and offsite services and market share gains across various product categories. Despite challenging comparisons to the previous year, Fastenal's positive attributes are anticipated to have driven its growth.
If we go by the latest monthly sales report, May’s average daily sales grew 5.2% to $29.5 million, moderating from 7.8% growth in April 2023. The metric witnessed 17.6% growth in May 2022.
In terms of end markets/products/customers in May and April 2023, manufacturing sales improved 9.7% and 13% from the year-ago months, respectively. Non-residential construction declined 9.5% in May and 8.2% in April 2023.
Fastener sales were down 0.6% in May (against a 1.2% increase in April 2023). Safety sales increased 6.8% in May compared with 10.1% growth in April 2023. In terms of customer channel, national accounts were up 9% year over year in May (compared with a 13% increase in April 2023), while non-national accounts growth remained unchanged from the year-ago level (compared with a 1% rise in April 2023).
Our model predicts Fastenal’s overall daily sales to be $29.2 million for the second quarter, indicating an increase from $27.8 million reported a year ago and from $29 million in the prior quarter.
Margins: Steel and freight expenses continue to decline. The company is focused on maintaining a balance between pricing and declining costs, aiming to eliminate any negative impact on the full-year margin.
The negative impact from the customer and product mix, high growth in the lower margin of Onsite and non-fastener products and lower product margins in certain other product categories are likely to have been headwinds. Also, more overhead costs and supply chain headwinds are expected to have weighed on the company’s margins.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for FAST this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. 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 #3.
Stocks With the Favorable Combination
Here are some companies which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Builders FirstSource, Inc. (BLDR - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1.
BLDR’s earnings topped the consensus mark in all the last four quarters, with the average being 68.3%. Earnings for the to-be-reported quarter are expected to decrease 58.5% year over year.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +1.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BLD’s earnings topped the consensus mark in all the last four quarters, with the average being 12.9%. Earnings for the to-be-reported quarter are expected to drop 1.6% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +5.02% and a Zacks Rank #3.
FND’s earnings topped the consensus mark in three the last four quarters but missed in one occasion, with the average being 4.8%. Earnings for the to-be-reported quarter are expected to decline 13.2% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.