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Can Fastenal (FAST) Pull a Surprise this Earnings Season?

Zacks Equity Research

Fastenal Company FAST is set to report fourth-quarter 2016 results on Jan 18, before the market opens.

Last quarter, the company posted a negative earnings surprise of 2.22%. The company has posted one positive earnings surprise in the past four quarters. Hence, it has an average four-quarter negative surprise of 2.74%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Fastenal is a wholesale distributor to industrial and construction customers. It serves the manufacturing and non-residential construction markets.

Recently, the company revealed that its volume, revenue and customer count showed solid growth in the soon-to-be-reported quarter. The company’s revenues in the fourth quarter rose 174% year over year on 209% volume growth. The upside was mainly driven by the addition of new stations as well as a higher utilization per station compared to the year-ago quarter. The company also added 3,177 new customers in the quarter, reflecting an increase of 92% year over year.

Meanwhile, Fastenal added that almost 13,000 full electric vehicles were on road in the Netherlands at the end of 2016, representing approximately 38% growth year over year.

For the fourth quarter, the Zacks Consensus Estimate for earnings stands at 38 cents, reflecting a 2.3% year-over-year decrease. Meanwhile, the estimate for revenues is pegged at $951.4 million, implying 3.1% growth.

Earnings Whispers

Our proven model does not conclusively show that Fastenal is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Fastenal’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

However, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Fastenal Company Price and EPS Surprise


Fastenal Company Price and EPS Surprise | Fastenal Company Quote

Stocks to Consider

Here are some companies in the construction sector, that, according to our model, have the right combination of elements to post an earnings beat this quarter:

Chicago Bridge & Iron Company N.V. CBI, expected to release its quarterly results on Feb 23, has an Earnings ESP of +2.76% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Home Depot, Inc. HD has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is slated to release its quarterly results on Feb 21.

EMCOR Group, Inc. EME has an Earnings ESP of +1.21% and a Zacks Rank #3. The company is expected to report its quarterly results on Feb 23.

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