Is Fastenal on the Fast Track?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Industrial and construction supplier Fastenal (Nasdaq: FAST  ) recently reported its third-quarter results in line with market expectations. The company seems to have done well despite the sluggish global economy -- evidence, perhaps, that the manufacturing and construction industry continues to display solid results based on increased demand in the sector.

Let's dig deeper and find out how the company performed.

The quarter's nuts and bolts
Although international business now accounts for nearly 10% of Fastenal's sales, most of its business is still based in North America. For the quarter, Fastenal saw a steep rise in demand, both in domestic and international markets, and sales rose 20.4% from the year-ago period to $726.7 million.

Net income rose 29% to $96.8 million, translating into earnings per share of $0.33, in line with market expectations. The company posted its sixth straight quarter of 25%-plus growth, and its seventh straight quarter of higher profit growth than sales growth.

Fastenal benefited from aggressive store openings. It added 94 new locations in the first nine months of 2011 and estimates that it will open 115 to 125 new stores overall this year. It plans to continue expanding into 2012, adding 4% to 6% to its store total during the calendar year.

Manufacturers firm up
There have been signs that manufacturers are continuing to contribute to growth, as U.S. industrial production advanced in September for a fifth straight month. For Fastenal, sales to manufacturers, which account for nearly half of the company's sales, grew by 18%, while non-residential customers, which account for 20% to 25% of the sales, were up by 15%.

A wide customer base and valuable partnerships with companies from diverse industries -- with names such as 3M (NYSE: MMM  ) , Eaton (NYSE: ETN  ) , and Kimberly-Clark (NYSE: KMB  ) -- have helped the company market its products better. All three of these companies are marketing partners with Fastenal, and they rely on the company to help get their products into consumers' hands.

Fastenal plans to expand its product portfolio, especially its private-label brands such as ProFitter, Blackstone, and Northway. With the cash inflow it generated during the year, the company is well positioned for this expansion. Moreover, Fastenal has no debt.

Loose ends
As nearly 50% of the company's sales consist of some type of fasteners that are mostly made from steel, fluctuations in steel and energy prices can have a deep impact on  performance. So far, the company has managed its costs well, but investors interested in this stock need to watch out for changes in energy and steel prices.

Fools should also take a look at the quarterly performance of competitor W.W. Grainger (NYSE: GWW  ) , which recently reported third-quarter earnings that rose 21% and raised its full-year earnings estimate.

The Foolish bottom line
Fastenal has consistently posted strong quarterly results and has growth plans in place to take advantage of increasing manufacturing activity. I would suggest that Fools keep an eye on this stock. To keep up with all the events and news, add Fastenal to My Watchlist.

Fool contributor Navjot Kaur owns no shares in any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Kimberly-Clark and 3M. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1579977, ~/Articles/ArticleHandler.aspx, 10/26/2016 3:36:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,214.88 45.61 0.25%
S&P 500 2,141.03 -2.13 -0.10%
NASD 5,252.38 -31.02 -0.59%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 3:21 PM
ETN $64.19 Up +1.01 +1.60%
Eaton CAPS Rating: ****
FAST $39.05 Up +0.41 +1.06%
Fastenal CAPS Rating: ****
GWW $207.45 Up +4.37 +2.15%
W.W. Grainger CAPS Rating: ****
KMB $113.72 Down -0.01 -0.01%
Kimberly-Clark CAPS Rating: ****
MMM $166.85 Up +0.62 +0.37%
3M CAPS Rating: *****