Fastenal (NASDAQ: FAST) continues to see sluggish demand in the industrial sector, and its latest results are weighing on the stock. Shares of Fastenal were down 7% at 3:30 p.m. ET. after the parts distributor reported first-quarter results.
Demand remains a question
Fastenal is a distributor of industrial and construction supplies, meaning that a lot of its customers were facing headwinds in 2023. But the company's sales have largely held up better-than-expected, helping shares to climb 45% over the past year.
It appears expectations got a bit ahead of themselves. Fastenal earned $0.52 per share in the just-reported quarter on revenue of $1.9 billion, just below Wall Street's expectations for $0.53 per share in earnings on sales of $1.91 billion.
The company cited a lot of one-time factors in the quarter, including poor weather and an unusually early Easter that made year-over-year comparisons difficult. Fastenal grew sales by just 1.9% in the quarter but said adverse weather reduced sales by 35 to 55 basis points compared to the impact of weather a year ago.
But those items only explain so much. "The truth of the matter is, the core issue remains sluggish demand," CEO Dan Florness said during the post-earnings call.
Is Fastenal a buy after its earnings miss?
The bull case for Fastenal is that its diverse product offering and geographic reach would help shield it from the worst impact of a down cycle. That's largely played out, but this latest quarter is a reminder that there is only so much any company can do in the face of poor demand.
For those with a long enough time horizon and the patience to wait through a downturn, Fastenal offers broad exposure to the industrial economy. But it could be hard for this stock to take off until conditions on the ground improve.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
