What's in the Cards for Fastenal (FAST) in Q3 Earnings?
Fastenal Company FAST is scheduled to report third-quarter 2022 results on Oct 13, before the opening bell.
In the last reported quarter, earnings came in line with the Zacks Consensus Estimate but revenues missed the same. Earnings and revenues increased 19.7% and 18% from the year-ago figures, respectively. Fastenal’s earnings topped the consensus mark in the last four quarters, with the average being 4%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at 48 cents over the past 60 days. The estimated figure indicates 14.3% growth from the year-ago level. The consensus mark for revenues is pegged at $1.79 billion, suggesting a 14.9% increase from the year-ago reported figure of $1.55 billion.
Fastenal Company Price and EPS Surprise
Fastenal Company price-eps-surprise | Fastenal Company Quote
Key Factors to Note
Sales: Higher manufacturing and non-residential construction demand are expected to have generated higher sales on a year-over-year basis (although at a moderate level) for this national wholesale distributor of industrial and construction supplies.
If we go by the latest monthly sales report, August’s average daily sales grew 16.1% to $28 million, moderating sequentially. In July 2022, daily sales registered 18.1% growth, whereas the same had witnessed 9% growth in August 2021.
The company has been navigating well through issues like price inflation, supply chain challenges and a shortage of labor. It has been gaining from all product categories, end markets and customers.
In terms of end markets/products/customers, in August and July, manufacturing sales improved 23.5% and 22.7% from the respective year-ago months. Non-residential construction grew 5.8% and 8.8% for August and July 2022, respectively.
Fastener sales were up 19.8% in August (compared with a 19.8% increase in July 2022). Safety sales increased 11.7% in August compared with 13.6% growth in July. In terms of customer channel, national accounts were up 20% year over year in August (compared with a 23% increase in July), while non-national accounts grew 10% (compared with a 12% rise in July 2022).
The Zacks Consensus Estimate for the company’s overall daily sales is pegged at $27.9 million, which indicates an increase from $27.8 million reported in the prior quarter and $24.3 million a year ago.
Margins: Inflationary pressure has been a cause of concern. The company highlighted that it has been experiencing significant material cost inflation, particularly for steel, fuel and transportation. The company has been experiencing the adverse effects of tightening global and domestic supply chains.
However, Fastenal has been successfully raising prices to offset inflationary pressure. The company has been undertaking additional steps to counter cost pressure and incremental tariffs, which are expected to reflect on the bottom line.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for FAST this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Fastenal carries a Zacks Rank #4 (Sell).
Stocks With the Favorable Combination
Here are some companies which, according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
PulteGroup, Inc. PHM has an Earnings ESP of +1.75% and a Zacks Rank #3.
PHM’s earnings topped the consensus mark thrice but missed the same on one occasion, with the average surprise being 5.6%. Earnings for the to-be-reported quarter are expected to increase 51.7% year over year.
Boise Cascade Company BCC has an Earnings ESP of +3.29% and a Zacks Rank #1.
BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to increase 92.6% year over year.
KBR, Inc. KBR has an Earnings ESP of +1.60% and a Zacks Rank #3.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 11.5%. Earnings for the to-be-reported quarter are expected to decline 1.6% year over year.
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Fastenal Company (FAST) : Free Stock Analysis Report
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Boise Cascade, L.L.C. (BCC) : Free Stock Analysis Report
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