Categories Analysis, Other Industries

Earnings preview: Fastenal (FAST) looks poised to end FY19 on a bright note

While most of its peers struggled with the tariff dispute last year, Fastenal Company (NASDAQ: FAST) managed to stay resilient to the US-China trade conflict. When the industrial distributor reports its fourth-quarter results Friday before the opening bell, market watchers will be looking for earnings of $0.32 per share, which represents a 10% year-over-year growth. Revenues are expected to rise by 5% to $1.29 billion.

Fastenal beats Q3 earnings estimates; revenues in-line

It is estimated that the core areas of the business – onsite locations, vending machine installations, and construction – performed well in the final three months of the fiscal year. The recent hike in product prices should ease the impact of tariff-related inflation in the to-be-reported quarter, thereby catalyzing sales growth.

Cost Pressure

Meanwhile, the revision of the product mix has come at a price, as the higher production costs and logistics expenses put pressure on gross margin. Headwinds in the overseas market, amid economic uncertainties, might have a negative impact on overall performance. The slowdown is evident from the softness in daily sales growth last year, as customers postponed their purchases.

Long-term Prospects

Armed with its well-conceived business plan and innovation, the company is poised to overcome the current slump. However, it might need to focus more on non-core products, in view of the segment’s lackluster performance in recent quarters.

Looking Back

In the third quarter, a further increase in installed devices pushed up revenues to $1.37 billion. Consequently, earnings moved up 8% annually to $0.37 per share, which also exceeded the market’s prediction. Meanwhile, the management lowered its forecast for new vending machine deals in the full fiscal year.

Also Read:  Lyft (LYFT) aims to achieve adjusted EBITDA profitability by Q4 2021

Recently, Fastenal’s competitor HD Supply Holdings (HDS) got a boost after the market reacted positively to its decision to split the company into two stand-alone units, with the aim of improving operational efficiency. Last month, it reported a modest increase in third-quarter earnings, aided by a 2% revenue growth.

Also see: Fastenal Q3 2019 Earnings Conference Call Transcript

At $37, Fastenal’s shares on Wednesday traded close to the record highs seen a few months ago. The stock has increased 24% in the past twelve months, all along maintaining a steady uptrend.

Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips

Most Popular

Baidu (BIDU) Q2 earnings rise unexpectedly; stock falls

https://www.youtube.com/watch?v=50yUaLybUnA&t=667s China-based internet search firm Baidu Inc. (NASDAQ: BIDU) reported financial results for the second quarter of 2020 on Thursday after the market's close. Earnings exceeded analysts’ expectations, but the

Applied Materials (AMAT) tops Q3 2020 targets; provides Q4 outlook

Applied Materials' (NASDAQ: AMAT) earnings and revenue for the third quarter exceeded the market's views. Adjusted EPS of $1.06 and revenue of $4.40 billion in Q3, grew 43% and 23%,

Is Altimmune (ALT) stock a buy right now?

A lot of stocks in the biotech space have skyrocketed this year after their announcements and advances in finding a vaccine or in the treatment of COVID-19. While these companies

Top