) is set to report second quarter 2013 results before the opening
bell on Jul 10. Last quarter it posted in-line results. Let's see
how things are shaping up for this announcement.
Factors to Consider
Fastenal's daily sales growth rates have declined sharply in the
last 3 - 4 quarters due to end market slowdown. Also, daily sales
growth rates in the first quarter of 2013 were hurt by
unfavorable weather conditions in January and February and an
extended holiday shutdown in January. Daily sales growth of 4.8%
in April was also disappointing.
Moreover, on June 5, Fastenal reported drastic year-over-year
decline in daily sales for May 2013. Fastenal's daily sales
growth rates came in at 5.3% for the month of May, significantly
down from 13.1% in the corresponding prior-year month.
The declining daily sales rates have been due to lower sales of
its fasteners product line, overall weak non-residential
construction market and the uncertainty in U.S economic policy.
Following the release of its disappointing May sales information,
Fastenal witnessed downward movement of estimates in the past 30
days. The Zacks Consensus Estimate for fiscal 2013 declined 0.6%
to $1.59 over the last 30 days whereas the same for fiscal 2014
declined 0.5% to $1.85 over the same time frame.
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:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
The stock has a negative ESP of -2.44%.
Zacks Rank #4 (Sell ):
Fastenal's Zacks Rank #4 when combined with a negative ESP makes
positive surprise prediction difficult. We caution against stocks
with Zacks Ranks #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
With the overall housing market improving steadily, there are
many companies that are likely to beat earnings this quarter.
Here are some other companies you may want to consider as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
Ryland Group Inc.
), Earnings ESP of + 4.69% and Zacks Rank #1 (Strong Buy).
DR Horton Inc.
), Earnings ESP of + 8.57% and Zacks Rank #1 (Strong Buy).
The Home Depot, Inc.
) , Earnings ESP of +1.68% and Zacks Rank #2 (Buy).
D R HORTON INC (DHI): Free Stock Analysis
FASTENAL (FAST): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
RYLAND GRP INC (RYL): Free Stock Analysis
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