FAST - Here's What This Leading Industrial Company Just Said About the Economy
2023-10-14 12:03:00 ET
Investors in industrial supply company Fastenal (NASDAQ: FAST) were pleased to see their stock rise 7.5% on the day of the third-quarter earnings release. That's excellent news for Fastenal, and given the company's sales are often seen as a critical bellwether of conditions in the industrial sector, many commentators are taking it as a sign that an inflection point has passed in the industrial economy. I beg to disagree, and here's why.
Anyone hoping for an upcoming earnings season characterized by industrial companies lauding an improvement in the economy, based on Fastenal's earnings, might be in for a disappointment. Yes, Fastenal did well in the quarter. Still, I'd argue this was mainly due to the successful expansion of its onsite locations rather than any cyclical pick-up in the economy.
Fastenal signed 93 new onsite locations in the quarter and hit 268 new onsite locations for the year while aiming to reach 350 new locations for the full year. Discussing Fastenal's onsite locations on the earnings call, CEO Daniel Florness said: "Our daily sales in those onsite, excluding transferred business when you open an onsite, is in the low-double-digit rates. Those sales contributed to the 5.7% increase in overall sales in the quarter.
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Here's What This Leading Industrial Company Just Said About the Economy