Fastenal Company FAST recently released August sales report, wherein average daily sales or ADS grew 2.5% to $22.2 million compared with 2.6% growth registered in July 2020 and 6.3% in the year-ago period. The upside was led by notable gains in safety products. Notably, daily sales on a seasonal basis were up 3.8% compared with the company’s benchmark (historical five-year average) of 3.3%.
Meanwhile, Fastenal’s overall August sales of $465.2 million were down 2.2% year over year. In July, 2.6% net sales growth was recorded by the company.
End-Market Perspective, Product Lines & Customers
From an end-market perspective, manufacturing sales declined 5% for the month against 8.8% growth a year ago. Non-residential construction declined 13.5% versus 1.4% growth reported in August 2019. Average daily sales growth rate in manufacturing has improved sequentially in August, while that of non-residential end markets declined.
Fastenal derives sales from Fasteners, Safety and other product lines. Fasteners witnessed a 7.3% decline in sales last month versus 4.6% growth registered in the year-ago period. Notably, the monthly sales data reflects that fasteners sales trend has improved. After plunging 22.5% in April, the figure was down 15.3%, 11.4%, 7.5% and 7.3% in May, June, July and August, respectively. Safety products grew 35.1% in August compared with 38% growth in July.
In terms of customer/channel, National account daily sales growth remained unchanged in August from a year ago, given the fact that 33% of the top 100 accounts and 44.7% of public branches are expanding. Also, non-national accounts were up 6% year over year for the month. In the year-ago period, daily sales growth in non-national accounts remained unchanged year over year.
Notably, negative customer/product mix — as a result of increased growth of lower-margin national accounts and safety products — along with lower proportion of higher margin fasteners have been impacting Fastenal’s gross margin over the past three years. This is expected to continue creating near-term gross margin headwinds.
Shares of this Zacks Rank #3 (Hold) company have gained 44.3% over the past year, outperforming the industry’s 21.6% growth.
Some better-ranked stocks in the Zacks Retail-Wholesale sector include BMC Stock Holdings Inc. BMCH, Builders FirstSource Inc. BLDR and Lumber Liquidators Holdings, Inc. LL. While BMC and Builders FirstSource currently sport a Zacks Rank #1 (Strong Buy), Lumber Liquidators carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BMC’s earnings for 2020 are expected to increase 8.4%.
Builders FirstSource’s earnings for 2021 are expected to increase 18.4%.
Lumber Liquidators’ earnings surpassed estimates in three of the trailing four quarters, with the average surprise being 432.5%.
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