Fastenal Company ($FAST) Earnings (Q3 FY22)

 Fastenal Company ($FAST) Earnings and Opinion:


Fastenal is a company in the Industrials sector and operates in the Industrial Distribution industry. The company engages the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. Fastenal was founded in 1967 and is currently headquartered in Winona, Minnesota. The company made its debut on the stock market in 1987.

Fastenal Earnings Results:

  • Revenue of $1.802B beating expectations of $1.780B
  • Daily Sales of $28.2M beating expectations of $27.9M
  • Gross Margin of 45.9% missing expectations of 46.19%
  • Operating Income of $379.2M beating expectations of $373.45M
  • Pre-Tax Margin of 20.82% beating expectations of 20.72%
  • Adj Diluted EPS of $0.50 beating expectations of $0.48
Opinion:
Fastenal is currently moving a slight bit higher. The company reported earnings before the market opened this morning. The company had a pretty solid earnings report, with more beats and misses. Fastenal is impacted heavily by the Hurricane in the southeast. They are expecting the quarterly growth to be down 10 to 30 bps from it. FX was also a negative impact to sales and affected it by 60 bps. Looking deeper into the earnings report, we can see that the growth has faltered a tiny bit. We can see that the margins are slimming down as well, this is because of the ongoing inflationary environment we are currently in. It is costing a lot more to make the products to sell, which is the answer to why margins are shrinking. It does look like the supply chain is getting a little bit better for them though. They aren't holding on to inventory as long, and they are able to effectively have a solid metric for receivables turnover. As far as valuation goes, EV/EBITDA is at 16.91, which is above industry averages. The P/E ratio is at 24.75, which is also above industry averages. Lastly, P/FCF is at 42.62, which is way over industry levels. Therefore, we have a pretty overvalued company we are working with. In my opinion, I have never really like this company. Although the long-term chart looks solid, it seems as it has established itself as a value company. I do not see a lot of growth with this one, and they are part of industrials, which basically sees all of the troubles in an economic whirlwind like we are experiencing right now. I want to see how they recover though, it looks like they are doing a decent job with supply chain issues, and they need to find a way to lower the cost of goods sold. It is definitely not a bad company to hold, I am just a little bearish on it. If you like well-established companies that will probably be around forever, you should take a solid look at Fastenal. 


*Information from Bloomberg and Yahoo Finance

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