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Fastenal (FAST) Looks Well Poised: Time to Invest in Stock

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·4 min read
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Fastenal Company FAST has been gaining from strong demand for manufacturing and construction equipment and supplies and persistent focus on virtual platforms. Increased pricing is also helping the company.

Shares of this maker of industrial and construction fasteners have outperformed the industry over the past three months. The 2022 earnings estimates for this Zacks Rank #2 (Buy) company have moved upward to $1.88 per share from $1.86 over the past 30 days. The estimated figure indicates 17.5% year-over-year growth. This positive trend signifies bullish analysts’ sentiments, indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

What Makes the Stock an Attractive Pick?

Higher Manufacturing & Construction Demand: The company has been gaining from solid demand for traditional manufacturing and construction clients. During first-quarter 2022, daily sales of Fastener products (accounting for approximately 34.3% of first-quarter sales) rose 24.6% year over year, backed by higher manufacturing and construction demand as well as increased pricing.

Higher Pricing & Cost Control: Although Fastenal and other industry players have been witnessing supply-chain disruptions and significant inflation in material and transportation, the company’s cost-control efforts and higher pricing have been driving profits. Pricing contributed 580 to 610 basis points to growth in the first quarter of 2022, reflecting actions taken to offset inflation.

Meanwhile, Fastenal is actively seeking to control costs to offset cost inflation, especially product and transportation costs. The strategies for the same include automating warehouses, increasing delivery efficiency through its trucking network, and selling more private-level products with higher margins. This will aid the company to improve efficiency level, thereby increasing returns.

Focus on E-commerce: Fastenal has been focusing more on virtual platforms to boost customers’ engagement. The company’s e-commerce business includes sales made through an electronic data interface with customers. During first-quarter 2022, daily sales through e-commerce increased 55.6% year over year. Digital footprint represented 47% of sales for first-quarter 2022. The metric was 39.1% a year ago and 34.9% two years ago. Fastenal’s goal is to hit 55% of sales at some point later in 2022. It is to be noted that the company started calculating its Digital Footprint in first-quarter 2021 that includes sales through FASTVend, FASTBin and FASTStock as well as e-commerce. Revenues attributable to eCommerce represented 16.1% of total first-quarter 2022 revenues.

Rewarding Shareholders: Fastenal has been driving investor value by providing regular dividends. The company began paying annual dividends in 1991 and semi-annual dividends in 2003. It then expanded to quarterly dividends in 2011. It paid nearly $178.4 million worth of dividends in first-quarter 2022 compared with $160.8 million a year ago. The company continues raising quarterly dividends on a regular basis.

3 Other Retail-Wholesale Stocks Hogging the Limelight

Some other top-ranked stocks, which warrant a look in the Zacks Retail-Wholesale sector are MarineMax, Inc. HZO, BBQ Holdings, Inc. BBQ and Cracker Barrel Old Country Store CBRL.

MarineMax sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 32.8%, on average. Shares of the company have declined 19.1% in the past year.

The Zacks Consensus Estimate for MarineMax’s 2022 sales and EPS suggests growth of 16% and 21.5%, respectively, from the year-ago period’s levels.

BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 11.7% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.

Cracker Barrel carries a Zacks Rank #2. Cracker Barrel has a long-term earnings growth of 9.4%. Shares of the company have declined 34.8% in the past year.

The Zacks Consensus Estimate for Cracker Barrel’s 2022 sales and EPS suggests growth of 17.3% and 33.5%, respectively, from the year-ago period’s levels.


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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
 
Fastenal Company (FAST) : Free Stock Analysis Report
 
MarineMax, Inc. (HZO) : Free Stock Analysis Report
 
BBQ Holdings, Inc. (BBQ) : Free Stock Analysis Report
 
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