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Fastenal Company (FAST) Earnings Aren’t Growing Fast Enough

Fastenal Company (NASDAQ:FAST) is slated to release its quarterly report on Wednesday. Yet although investors expect Fastenal earnings to improve slightly, the big question is whether any growth will be enough to support the stock’s rich valuation. Unless Fastenal can provide a nice surprise on the earnings front, the answer to that question is likely to be no.

Fastenal Company (NASDAQ:FAST)

Fastenal Company (NASDAQ:FAST) has its foot in two parts of the industrial and construction business, supplying corporate customers with fasteners and other products that they can then incorporate into their own work, as well as selling those products directly to retail customers. With the economy starting to perk up, can Fastenal make its mark and get its growth to accelerate? Let’s take an early look at what’s been happening with Fastenal Company (NASDAQ:FAST) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Fastenal

Analyst EPS Estimate $0.41
Change From Year-Ago EPS 7.9%
Revenue Estimate $857.13 million
Change From Year-Ago Revenue 6.5%
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

Is Fastenal’s earnings growth slowing down too fast?
Analysts have been concerned about Fastenal Company (NASDAQ:FAST)’s earnings growth prospects in recent months, having trimmed a penny per share from their June-quarter estimates and $0.04 and $0.06 respectively from their full-year 2013 and 2014 consensus figures. The stock has reflected that pessimism, having lost more than 5% since early April.

Part of that decline is due to Fastenal’s most recent quarterly earnings report, in which the company failed to meet sales expectations. In the company’s conference call, Fastenal Company (NASDAQ:FAST) executives pointed to improving margins and greater signings of customers for its tool and supply vending machines, but even with cost-cutting and other initiatives designed to bolster profits, generally weak economic conditions have contributed to the weak pace of revenue growth.

Worse than that news is the fact that some of Fastenal’s competitors have held up somewhat better. MSC Industrial Direct Co Inc (NYSE:MSM) encountered much of the same sales weakness from the metalworking industry that Fastenal saw in its overall results, and both stocks have performed in line with each other over the past quarter. But W.W. Grainger, Inc. (NYSE:GWW) soared after its earnings in April, as it saw its earnings rise more than 14% and boosted its guidance for full-year 2013 revenue and earnings.

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