Last week, you might have seen that Fastenal Company (NASDAQ:FAST) released its third-quarter result to the market. The early response was not positive, with shares down 4.3% to US$44.62 in the past week. Results were roughly in line with estimates, with revenues of US$1.4b and statutory earnings per share of US$0.38. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Fastenal's 16 analysts is for revenues of US$5.80b in 2021, which would reflect a reasonable 4.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 5.3% to US$1.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.86b and earnings per share (EPS) of US$1.56 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.5% to US$46.58. It looks as though they previously had some doubts over whether the business would live up to their expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Fastenal analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$36.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Fastenal's revenue growth will slow down substantially, with revenues next year expected to grow 4.2%, compared to a historical growth rate of 8.6% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% next year. Factoring in the forecast slowdown in growth, it looks like Fastenal is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Fastenal. Long-term earnings power is much more important than next year's profits. We have forecasts for Fastenal going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Fastenal .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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