Thursday, October 13, 2011

Fastenal Confirms US Construction Acitivity is Solid




Fastenal $FAST gave earnings and demonstrated good growth. The Fastenal story is a good one and stock investors can find a detailed write up and earnings analysis of the company’s fundamental evaluation in the link at the bottom. However, for now the important thing to takeaway from Fastenal’s earnings report is that-if the US was in isolation- a double dip recession looks unlikely. Fastenal is a good company to look at because it sells the kinds of fasteners and hardware equipment that are used in construction activity.

The best way to conclude this from the results is to look at the sales figures for stores that have been open for more than five years. These stores tend to be more cyclical in their revenues because they are more mature in their market share within their local markets. Here are the numbers for revenue growth…




Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
2011
15.3%
17.9%
19.2%
19.1%
17.9%
18.2%
17.3%
15.2%
14.5%



2010
-2.1%
-0.5%
7.4%
14.9%
17.3%
16.2%
19.8%
18.2%
18.9%
17.9%
13.2%
16.0%
2009
-12.4%
-14.3%
-21.5%
-25.2%
-25.2%
-26.3%
-26.6%
-24.7%
-24.2%
-21.7%
-15.0%
-12.1%



…and it is clear that US construction activity hasn’t fallen off a cliff just yet!


Further Reading
http://earningsview.blogspot.com/2011/01/fastenal-set-for-good-growth-but-what.html