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.

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

Biogen posts Q3 earnings well above estimates

Biogen (NASDAQ: BIIB) reported third-quarter 2021 financial results before the regular market hours on Wednesday. The company reported Q3 revenue of $2.78 billion, down 18% year-over-year and higher than the

Infographic: Highlights of Verizon’s (VZ) Q3 2021 earnings report

Verizon (NYSE: VZ) reported Third-quarter 2021 financial results before the regular trading hours on Wednesday. The telecommunications giant reported Q3 revenue of $32.9 billion, up 4.3% year-over-year and above the

PM Earnings: Key quarterly highlights from Philip Morris Q3 financial results

Philip Morris International Inc. (NYSE: PM) reported Third-quarter 2021 earnings results today. Net revenues increased 9% year-over-year to $8.1 billion. The reported net income amounted to $2.42 billion compared to

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top