A new round of U.S. tariffs on China brought trade worries to the forefront of investors' minds Wednesday. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) both fell throughout the day.
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Materials stocks were hit hard; the SPDR S&P Metals and Mining ETF (NYSEMKT: XME) dropped 2.1%. The defensive utility sector was the only portion of the market in the green, with the Utilities Select SPDR ETF (NYSEMKT: XLU) closing the day up 0.9%.
Among individual companies making news, Fastenal (NASDAQ: FAST) reported strong profits, while amusement park operator Cedar Fair (NYSE: FUN) announced a disappointing drop in early season attendance.
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Fastenal cranks up profits
Shares of industrial supply company Fastenal soared 10.1% after the company reported better-than-expected second-quarter earnings and strong sales trends. Net sales increased 13.1% to $1.27 billion, about what observers were expecting. Earnings per share jumped 42% to $0.72; analysts had been expecting $0.66.
The sales gains were driven by increases in underlying demand as well as by the success of Fastenal's growth initiatives. Daily sales growth in the non-residential construction end market accelerated with a 15.5% increase, and its sales to manufacturing customers grew 13.3%. Sales figures released for the month of June showed that Fastenal's business was gaining momentum late in the quarter, with non-residential construction daily sales up 17.4%, manufacturing sales gaining 14%, and total daily sales up 13.5%.
Gross margin fell 1.1 percentage points year over year, the continuation of a trend that had created concern last quarter, but the metric held steady sequentially at 48.7%. Operating margin, however, was flat from Q2 last year, thanks to operating leverage. Earnings benefited from the new tax law by $0.15 per share.
Fastenal is reaping the benefits of its strategy of giving customers immediate access to its products when they're needed. It's installing vending machines with parts on customer sites, and sales through those machines increased more than 20% in Q2. It also has increased onsite locations -- sales and service employees on or near customer sites -- 56.6% since last year, helping daily sales to national accounts to climb by 19.1% in the quarter and 20.4% in June.
Investors were unamused by Cedar Fair's attendance drop
Amusement park operator Cedar Fair announced a decline in revenue due to decreased attendance compared with last year and shares plummeted 7.9%.
Revenue for the year through July 8 was down 2% to $563 million, and the 11.1 million guest visits was 314,000 (or 3%) fewer than last year at this time. Average in-park spending per capita was $45.87, exceeding the $45.41 per capita that guests spent through the July Fourth holiday last year. The $10 million decline in revenue was partly offset by a $2 million increase in out-of-park revenues, including resort accommodations.
The period represents about 40% of Cedar Fair's total operating days in the year, but the majority of its revenue is still to come in the peak vacation period of July to August.
"Although early season attendance at our seasonal parks through this past weekend has not met our expectations, we are encouraged by the positive guest response to our new rides and attractions, in particular our new coasters Steel Vengeance at Cedar Point and Hang Time at Knott's Berry Farm," said CEO Richard Zimmerman in the press release. "We are also pleased with the growth of in-park guest spending where we are seeing year-over-year increases in food, merchandise and extra charge attractions."
Although the Cedar Fair expects attendance growth and higher guest spending in the second half, the company guided to full-year revenue of between $1.34 billion and $1.38 billion, below analysts' consensus estimate of $1.39 billion, which added to the gloom around the stock Wednesday.
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