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Fastenal (FAST) Shares Rise on Q3 Earnings & Revenue Beat

Fastenal Company FAST reported third-quarter 2022 results, wherein earnings and revenues topped the respective Zacks Consensus Estimate. The company’s top and bottom lines also improved on a year-over-year basis, given the strong demand in markets associated with industrial capital goods and commodities.

Fastenal’s shares gained 2.2% in the pre-market trading session on Oct 13 after it reported third-quarter 2022 results.

Earnings & Sales in Detail

The company reported earnings of 50 cents per share, which beat the consensus mark of 48 cents and rose 17.4% from the year-ago period.

Net sales totaled $1,802.4 million, beating the consensus mark of $1,785 million and increasing 16% from the year-ago figure of $1,554.2 million. Daily sales grew 16% year over year in the quarter.

The company reported daily sales of $27.8 million, reflecting an increase of 18% year over year, in the reported quarter. The upside was mainly due to higher unit sales owing to good demand from industrial capital goods and commodities, which offset softer markets tied to consumer goods and relatively lower growth in construction. The foreign exchange adversely impacted sales by 60 basis points (bps).

On a monthly basis, daily sales improved 13.7%, 16.1% and 18.1% in September, August and July, respectively, year over year.

Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 34.1% of third-quarter sales) rose 18.2% year over year. Sales of safety products (accounting for 20.5% of third-quarter sales) grew 12.4% on a daily basis. Sales of the remaining products (accounting for 45.4% of third-quarter sales) grew 15.4% year over year.

On the end-market basis, daily sales of Manufacturing (accounting for approximately 72.9% of third-quarter sales) rose 22.6% year over year. Sales of Non-residential construction (accounting for 10.2% of third-quarter sales) grew 5.2% on a daily basis. Sales of Other (accounting for 16.9% of third-quarter sales) declined 1.4% year over year.

Fastenal Company Price, Consensus and EPS Surprise

Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company Price, Consensus and EPS Surprise

Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote

Vending Trends & Other Growth Drivers

Fastenal signed 86 new Onsite locations during the quarter. As of Sep 30, 2022, the company had 1,567 active sites, up 14.6% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) increased more than 20% from a year ago.

The company continues to expect 375-400 annual Onsite signings in 2022.

Daily sales through weighted FMI devices grew 29.8% for the third quarter and represented 36.9% of net sales.

Daily sales to national account customers (representing 58% of total quarterly revenues) increased 20.8% on a year-over-year basis for third-quarter 2022. Daily sales to non-national account customers (which include government customers and represent 42% of total quarterly revenues) rose 9.9% from the prior-year quarter.

Margins

A gross margin of 45.9% for the reported quarter was down from 46.3% a year ago. This was due to product and customer mix, unfavorable price/cost, and FAST had a $3.4 write-down in the value of certain gloves in inventory.

The operating margin improved 50 bps to 21% from 20.5% a year ago.

Financials

Cash and cash equivalents were $231.5 million as of Sep 30, 2022, down from $236.2 million on Dec 31, 2021. The long-term debt at the quarter-end was $404.7 million, up from $330 million at 2021-end.

During the reported quarter, FAST returned $272.8 million to its shareholders in the form of $177.5 million worth of dividends and $95.3 million worth of share repurchases.

For the first nine months of 2022, cash provided by operating activities totaled $639.1 million, up from $613.7 million in the year-ago period.

Zacks Rank

Fastenal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks in Broader Sector

Some better-ranked stocks from the Zacks Retail-Wholesale sector include Builders FirstSource, Inc. BLDR, Yum China Holdings, Inc. YUMC and Sprouts Farmers Market, Inc. SFM.

Builders FirstSource presently sports a Zacks Rank #1. Shares of BLDR have risen 10.6% in the past year.

The Zacks Consensus Estimate for BLDR’s 2022 earnings per share (EPS) has moved north to $15.86 from $15.22 over the past 60 days. The estimated figure suggests 53.7% year-over-year growth.

Yum China carries a Zacks Rank #2. Yum China has a long-term earnings growth of 10%. Shares of the company have declined 24.8% in the past year.

The Zacks Consensus Estimate for Yum China's 2023 sales and EPS suggests growth of 19.9% and 85.5%, respectively, from the year-ago period’s levels.

Sprouts Farmers Market currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 15.6%, on average. Shares of the company have increased 22.4% in the past year.

The Zacks Consensus Estimate for Sprouts Farmers Market’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.


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