Why Fastenal Shares Bolted Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of nut, bolt, and fasteners retailer Fastenal (Nasdaq: FAST  ) jumped as much as 11% after the company reported its third-quarter earnings results.

So what: For the quarter, Fastenal recorded a 10% boost in revenue to $802.6 million while reporting a profit of $0.37. Earnings were right in line with Wall Street's expectations, however its sales figure fell $2.2 million shy of the consensus. Luckily, Mr. Market was forgiving, given that much of the weakness exhibited was attributed to unfavorable currency translations since Fastenal does a good chunk of its business internationally.

Now what: As for me, I'm not as thrilled about today's results and would heed the recent cautionary tales from other manufacturers like Alcoa (NYSE: AA  ) as a warning that all is not well in the manufacturing sector. Aluminum giant Alcoa led the week off with an earnings beat, but also sounded a cautionary warning that China and Europe are likely to curb growth in the near term. That might as well have sent shockwaves throughout the manufacturing sector, which includes companies like Fastenal. At a frothy 27 times forward earnings, the risks appear to far outweigh the reward potential of owning the stock.

Craving more input? Start by adding Fastenal to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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