Fast Times Are Not Just at Ridgemont High (FAST)

Nothing stirs an early morning buzz in traders like a company reporting solid earnings. While investors sipped their morning coffee, Fastenal (NASDAQ: FAST) added a little extra sugar to the doughnuts when the company reported third quarter earnings. Fastenal showed a profit of $0.37 per share versus the $0.33 it reported this time last year. Revenues for the quarter also grew by 10%. The earnings fell in line with the expectations of analysts while the revenue number slightly missed projections calling for a top line of $805 million. The company also noted it had opened 93 new stores during the 2012 calendar year.

In addition to this morning’s earnings report, traders may have already had their interest perked by a Wall Street Journal piece on the company last night. The writer believed Fastenal is poised to maintain its edge. Buyers approached the morning bell itching to purchase Fastenal shares. The stock leaped out of the gate $2.37 higher than the closing price on Tuesday afternoon to begin the trading day at $44.89. Shares prices declined after the opening to a low trade of the day at $44.00. By the time traders had unpacked their lunches on the east coast, the stock traded for an intraday high price of $47.17. Traders calmed down a bit from the morning flurry and share prices stabilized in the afternoon. At the end of trading day, the stock posted a gain of 8% to close up $3.57 at $45.89. Shares traded briskly throughout most of the day. A total of 6.81 million shares exchanged hands during the day compared to the 1.92 million traded on an average day.

Traders and investors may question all the excitement over an earnings report that basically met Wall Street expectations. One explanation may come from a Motley Fool blurb, which cited that any weakness in the quarter’s earnings might be due to currency fluctuations.

Fastenal stock has given investors a roller coaster ride over the last 12 months. Share prices hit a 52-week high toward the beginning of April when the stock traded for $55.05. The annual low of $32.26 was hit in October of last year. After establishing an annual high in the spring, the stock immediately turned south with share prices dropping 30% by the end of June. Since the first of July, the stock has managed to gain 18%. The question for traders to ponder is whether today’s earnings report and stock action can propel share prices higher.

Twelve investment research analysts cover the stock with an average rating of “hold”. Analysts expect the company to earn $0.35 per share for the next quarter and a $1.45 for 2012. The consensus view places a $44.50 price target on the stock.

Fastenal sells industrial and construction supplies. The company distributes its products through approximately 2600 company-owned stores. Fastenal’s customer base includes manufacturing and non-residential construction. The company’s competition includes W.W. Grainger (NYSE: GWW) and Lawson Products (NASDAQ: LAWS). The company is located in Winona, Minnesota, and was founded in 1967.

 

 

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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