) is set to report its third-quarter fiscal 2013 results on Oct 9
before the market opens. Last quarter, it posted in-line results.
Let's see how things are shaping up for this announcement.
Factors to Consider This Quarter
Fastenal's top line has been soft since the past 4-5 quarters
as the sales of its fasteners product line were being hurt by
end-market slowdown and broader economic uncertainty. Moreover,
the construction business has been soft for the past two
quarters. Vending was also soft in the second quarter.
However, in early September, Fastenal announced encouraging
sales results for the month of August which were a relief from
the recent sluggish sales of the company. Management's strategy
of slowing down vending pace and instead focusing on improving
near-term sales seems to be paying off as the August sales
recovered from a slower July.
Moreover, the strategic decision to slow down store growth and
instead increase headcount is also driving near-term sales
In addition, Fastenal has plans to reinvigorate the
high-margin fastener business and also improve sales performance
at underperforming stores. Moreover, Fastenal hopes to gain from
a new pricing system for stores and improved operational
efficiency across its distribution network (by adding significant
automation). Management expects these strategies to drive sales
growth back to the historical high-teens range by the first
quarter of 2014.
Our proven model does not conclusively show that Fastenal is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
The Earnings ESP is 0.0%.
Zacks Rank #3 (Hold):
Fastenal carries a Zacks Rank #3 (Hold) which lowers the
predictive power of ESP because a Zacks Rank #3 (Hold) when
combined with a 0.0% ESP makes surprise prediction difficult. We
caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other building products/construction companies
you may want to consider, as our model shows that they have the
right combination of elements to post an earnings beat this
Liquidators Holdings, Inc.
), Earnings ESP of +1.52% and a Zacks Rank #1 (Strong Buy).
Stock Building Supply Holdings, Inc.
), Earnings ESP of +57.14% and a Zacks Rank #3 (Hold).
D.R. Horton Inc.
), Earnings ESP of +2.44% and a Zacks Rank #3 (Hold).
D R HORTON INC (DHI): Free Stock Analysis
FASTENAL (FAST): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
STOCK BUILDING (STCK): Free Stock Analysis
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