Fastenal Company’s (FAST) share price went up after the industrial and construction supplies wholesale distributor announced sales results for the month of May. May daily sales improved from April and March — continuing the improving trend witnessed in Fastenal’s top line year-to-date.
May net sales rose 8.3% year over year to $313.5 million. Daily sales for the month grew 13.5% to $14.93 million, much better than May last year. Moreover, daily sales increase in May was better than 10% and 11.6% growth in April and March, respectively. Currency was a 0.5% headwind in the month.
Fastenal serves customers in the manufacturing and non-residential construction markets.
Daily sales to manufacturing customers (representing almost 50% of revenues) grew 12.9%, much better than 5.8% last year as well as 8.5% and 11.4% in Apr and Mar 2014, respectively.
Daily sales to non-residential construction customers (representing 20% to 25% of revenues) grew 8.4%, much better than 0.7% last year and a respective of 5.4% and 7.6% in Apr and Mar 2014.
After struggling for the several quarters, Fastenal’s top line turned around in the first quarter of 2014. Fastenal’s total average daily sales growth rate in the first quarter was 8.7%, up from 4.9% in the prior-year quarter, owing to increase in sales volume. Though the company witnessed softer sales in January and February due to harsh weather, sales improved in March. The double-digit growth in daily sales in March was driven by favorable Easter timing and increased investments in stores that led to improvement in sales.
Management also seems optimistic for top-line and incremental margin growth in the upcoming quarters as underlying markets improve, vending re-vamps, sales improvement efforts expand and comparisons remain easy throughout 2014.
Fastenal carries a Zacks Rank #3 (Hold). Better-ranked stocks in the building products/ construction/materials sector include Texas Industries Inc. (TXI), United Rentals Inc. (URI) and Gibraltar Industries, Inc. (ROCK). While Gibraltar Industries sports a Zacks Rank #1 (Strong Buy), Texas Industries and United Rentals have a Zacks Rank #2 (Buy).