Zacks_Analysts' Blog : Fastenal Meets Estimates - Analyst Blog

Fastenal Co. (FAST) posted a 34.2% increase in profit to $87.5 million in the fourth quarter of 2011 from $65.2 million in the same quarter of 2010. On earnings per share basis, profit improved 36.4% to 30 cents from 22 cents a year ago, exactly meeting the Zacks Consensus Estimate.

For full year 2011, profits improved 34.9% to $357.9 million from $265.4 million in 2010 and 34.4% to $1.21 per share from 90 cents per share in 2010. The profits were exactly in line with the Zacks Consensus Estimate during the year.

Sales in the quarter rose 21.6% to $697.8 million in the quarter, which is higher than the Zacks Consensus Estimate of $693 million. For the full year, sales increased 21.9% to $2.77 billion, which compared with the Zacks Consensus Estimate of $2.76 billion.

Sales to manufacturing customers (50% of sales historically) grew 21% in the quarter and 20% in the year. Meanwhile, sales to non-residential construction business (accounting for 20%–25% of sales historically) rose 17.4% in the quarter and 17.1% in the year

Gross profit rose 19.6% to $357.2 million in the quarter from $298.6 million in the year-ago quarter. Consequently, gross margin dipped marginally to 51.2% from 52.0% in the fourth quarter of 2010.

In 2011, Fastenal opened 122 stores, an increase of 4.9% from the prior year (127 stores). In 2012, the company expects to open stores at an annualized rate of 4.0% to 6.0%. As of December 31, 2011, the company had 2,585 stores.

Fastenal had cash and cash equivalents of $117.7 million as on December 31, 2011, compared with $143.7 million as on December 31, 2010.

In 2011, the company had a cash flow of $268.5 million from operating activities, an increase from $240.5 million in the prior-year period, driven mainly by an improvement in profit. Meanwhile, capital expenditures (net) increased to $116.5 million from $69.1 million in 2010.

Fastenal is a leading national distributor of industrial and construction supplies having stores in Canada, Mexico, the Dominican Republic, Puerto Rico, Singapore, China, and all the 50 states in the U.S.

The company has a widespread customer base, which belongs to varied markets, and protects its market position in tough economies. Further, the company has employed a hub and spoke model along with the opening of new stores and service centers to ensure efficient customer service in all aspects. These factors have led the company to maintain a Zacks #1 Rank on its stock, which translated to a short-term (1–3 months) rating of “Strong Buy”.