Fastenal Company (NASDAQ: FAST), a prominent provider of industrial and construction supplies, is set to announce its fourth-quarter financial results next week. Although the company maintains a strong business model and execution history, it has recently experienced a slowdown in growth.
In 2024, Fastenal’s stock showed solid performance, particularly during the latter part of the year, achieving an all-time high in early November. Although there has been a slight loss of momentum since then, the stock is recovering as earnings reports approach. Fastenal has long been favored by income investors for its consistent quarterly dividends. However, given the recent deceleration in industrial activity and various market challenges, the stock may appear overvalued.
Upcoming Q4 Report
Fastenal’s fourth-quarter results will be announced on January 17, prior to market opening, with Wall Street anticipating a year-over-year increase in both sales and profits. Analysts forecast earnings of $0.48 per share for Q4, up from $0.46 per share in the same period last year. Sales are projected to rise by 5% compared to the previous year, reaching approximately $1.84 billion.
As a leader in the industrial and construction supply sector, Fastenal boasts a vast distribution network and offers a wide range of solutions. With a reputation for steady sales performance and growing profitability, the company continues to expand its Onsite locations. Nonetheless, its financial performance can be unpredictable due to the cyclical nature of its operations, which depend on manufacturing and construction trends. A notable concern has been the decline in daily sales growth in recent years, notably affected by decreased fastener sales coinciding with a general downturn in industrial production.
During the Q3 earnings call, Fastenal’s CFO Holden Lewis, who plans to retire in April, mentioned, “Our full year anticipated net capital spending remains in the range of $235 million to $255 million, and we are currently trending towards the lower end of this range. The anticipated increase in net capital expenditures for 2024 is due to higher investments in hub automation and capacity, nearly completing a new distribution center in Utah, and increased spending on FMI to support additional signings.”
Q3 Financial Highlights
For the September quarter, Fastenal reported a 4% year-over-year increase in sales to $1.91 billion, with a net daily sales growth of 1.9%. The company added 93 new onsite locations, bringing the total to 1,986 active sites. Their net income for the third quarter was $298.1 million, or $0.52 per share, compared to $295.5 million, also $0.52 per share, in the same quarter last year. Earnings slightly surpassed expectations while sales met forecasts.
The stock’s latest closing price aligns closely with its 12-month average. Fastenal’s shares were up 1% on Friday afternoon, reflecting a 15% increase over the past six months.
