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In the last reported quarter, earnings and net sales beat the Zacks Consensus Estimate by 2.2%, and 0.6%, respectively. Earnings and net sales increased 8.4% and 3.7% from the year-ago figures, respectively.
Fastenal’s earnings topped the consensus mark in three of the last four quarters and met on one occasion, with the average being 2.6%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at 53 cents over the past 60 days. The estimated figure indicates 1.9% growth from the year-ago level. The consensus mark for revenues is pegged at $1.92 billion, suggesting a 3.1% increase from the year-ago reported figure of $1.86 billion.
Sales: The demand outlook for the broader manufacturing sector continues to show sluggishness. 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, February’s average daily sales (ADS) grew 2.6% to $29.1 million, improving from 1.6% growth in January 2024. February ADS was perhaps aided by a rebound from the poor weather conditions sequentially in January when weather negatively impacted January ADS by an estimated 120-150 basis points (bps) year over year.
In terms of end markets/products/customers in February and January 2024, total manufacturing sales improved 6.7% (Heavy Manufacturing and Other Manufacturing) and 4% from the year-ago months, respectively. Non-residential construction declined 3.4% in February and 8.6% in January 2024. Fastener sales were down 3.5% in February and down 6% in January 2024. On the other hand, Safety sales increased 8.3% in February compared with 9.7% growth in January 2024. Other categories improved 4.8% in February and 3.3% in January 2024.
In terms of customer channel, national accounts were up 7% year over year in February and 6% in January 2024, while non-national accounts declined 3% in February and 6% in January 2024.
Our model predicts Fastenal’s overall daily sales to be $29.8 million for the first quarter, indicating an increase of 2.7% from $29 million reported a year ago.
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 are expected to have weighed on the company’s margins.
Per our model, the gross margin for the quarter is expected to be 46.2%, up 50 bps from the year-ago figure. We expect total operating expenses to increase 3.7% to $473.7 million in the first quarter from a year ago.
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 -1.27%. 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.
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.
DECK’s earnings topped the consensus mark in all the last four quarters, with the average being 32.1%. Earnings for the to-be-reported quarter are expected to decrease 24.9% year over year.
Expedia Group, Inc. (EXPE - Free Report) has an Earnings ESP of +35.44% and a Zacks Rank #3.
EXPE’s earnings topped the consensus mark in all the last four quarters, with the average being 10.9%. Earnings for the to-be-reported quarter are expected to decline 80% year over year.
CVS Health Corporation (CVS - Free Report) has an Earnings ESP of +2.52% and a Zacks Rank #3.
CVS’ earnings topped the consensus mark in all the last four quarters, with the average being 4.9%. Earnings for the to-be-reported quarter are expected to decline 23.2% year over year.
Image: Bigstock
Fastenal (FAST) to Post Q1 Earnings: What's in the Cards?
Fastenal Company (FAST - Free Report) is scheduled to report first-quarter 2024 results on Apr 11, before the opening bell.
In the last reported quarter, earnings and net sales beat the Zacks Consensus Estimate by 2.2%, and 0.6%, respectively. Earnings and net sales increased 8.4% and 3.7% from the year-ago figures, respectively.
Fastenal’s earnings topped the consensus mark in three of the last four quarters and met on one occasion, with the average being 2.6%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at 53 cents over the past 60 days. The estimated figure indicates 1.9% growth from the year-ago level. The consensus mark for revenues is pegged at $1.92 billion, suggesting a 3.1% increase from the year-ago reported figure of $1.86 billion.
Fastenal Company Price and EPS Surprise
Fastenal Company price-eps-surprise | Fastenal Company Quote
Key Factors to Note
Sales: The demand outlook for the broader manufacturing sector continues to show sluggishness. 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, February’s average daily sales (ADS) grew 2.6% to $29.1 million, improving from 1.6% growth in January 2024. February ADS was perhaps aided by a rebound from the poor weather conditions sequentially in January when weather negatively impacted January ADS by an estimated 120-150 basis points (bps) year over year.
In terms of end markets/products/customers in February and January 2024, total manufacturing sales improved 6.7% (Heavy Manufacturing and Other Manufacturing) and 4% from the year-ago months, respectively. Non-residential construction declined 3.4% in February and 8.6% in January 2024. Fastener sales were down 3.5% in February and down 6% in January 2024. On the other hand, Safety sales increased 8.3% in February compared with 9.7% growth in January 2024. Other categories improved 4.8% in February and 3.3% in January 2024.
In terms of customer channel, national accounts were up 7% year over year in February and 6% in January 2024, while non-national accounts declined 3% in February and 6% in January 2024.
Our model predicts Fastenal’s overall daily sales to be $29.8 million for the first quarter, indicating an increase of 2.7% from $29 million reported a year ago.
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 are expected to have weighed on the company’s margins.
Per our model, the gross margin for the quarter is expected to be 46.2%, up 50 bps from the year-ago figure. We expect total operating expenses to increase 3.7% to $473.7 million in the first quarter from a year ago.
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 -1.27%. 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.
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.
Deckers Outdoor Corporation (DECK - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
DECK’s earnings topped the consensus mark in all the last four quarters, with the average being 32.1%. Earnings for the to-be-reported quarter are expected to decrease 24.9% year over year.
Expedia Group, Inc. (EXPE - Free Report) has an Earnings ESP of +35.44% and a Zacks Rank #3.
EXPE’s earnings topped the consensus mark in all the last four quarters, with the average being 10.9%. Earnings for the to-be-reported quarter are expected to decline 80% year over year.
CVS Health Corporation (CVS - Free Report) has an Earnings ESP of +2.52% and a Zacks Rank #3.
CVS’ earnings topped the consensus mark in all the last four quarters, with the average being 4.9%. Earnings for the to-be-reported quarter are expected to decline 23.2% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.