Fastenal's (FAST) February ADS Rises 2.6%, Improves Sequentially
Fastenal Company FAST recently released its February sales report, wherein average daily sales or ADS grew 2.6% to $29.1 million, showing better growth sequentially but moderating annually. In the prior month, daily sales registered 1.6% growth, and in the year-ago period, the same registered 9.6% increase.
The trend is better than the historical February daily sales growth average of up 1.6% month over month between 2018 and 2023 (excluding 2020). Net sales in February 2024 were $627.1 million, reflecting an increase of 7.7% year over year.
February ADS was perhaps aided by a rebound from the poor weather conditions sequentially in January when weather negatively impacted January ADS by an estimated 120-150 basis points (bps) year over year.
End-Market Perspective, Product Lines & Customers
From an end-market perspective, heavy manufacturing sales improved 3.1% for the month and other manufacturing inched up 3.6% from a year ago. Total manufacturing (which accounted for 75.2% of February 2024 sales) registered 6.7% growth in February 2024. Non-residential construction dropped 3.4% compared with a 1.8% decrease reported in February 2023. The ADS growth rate in manufacturing end markets declined but improved in non-residential markets in February compared to the prior month.
Fastenal derives sales from Fasteners, Safety and other product lines. Fasteners witnessed a 3.5% decline in sales last month against 8% growth in the year-ago period. Safety products grew 8.3% in February 2024 compared with a rise of 3.2% a year ago. In February 2024, Other categories improved 4.8% compared with a 13.8% increase a year ago. On a sequential basis, Fasteners and Other categories sales improved while that of Safety products moderated.
Geographically, sales in the United States grew 2.4% (compared with 9.1% a year ago), while Canada/Mexico grew 4.8% (compared with 15.8% a year ago). Rest of World sales declined 0.6% against 0.1% growth registered in the year-ago period.
In terms of customer/channel, National account daily sales growth advanced 7% in February from a year ago, given the fact that 63% of the top 100 accounts and 51.6% of public branches are expanding. Yet, non-national accounts showed a 3% decline year over year for the month. In the year-ago period, daily sales growth in non-national accounts was up 4% year over year.
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Shares of the company have gained 36.3% over the past six months, outperforming the industry‘s 14.4% growth. Despite tough year-ago comparisons, Fastenal’s decent large customers, its leverage in its digital strategy, onsite/offsite mix and market share gains across its product categories are expected to drive growth. The recent sales trend also aligns with management's remarks regarding a weighted improvement in the second half of the year.
Zacks Rank and Key Picks
Fastenal currently carries a Zacks Rank #3 (Hold).
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