The industrial sector is the backbone of the US economy. Thanks to sustained consumer demand and spending, the sector has been recovering at an accelerated pace since last year. Manufacturing output increased 1.2% sequentially in Februaryovertaking Reuters‘ Consensus estimate of 0.6% improvement. Year-over-year manufacturing output grew 7.4% in February 2022.
With the economy on the mend, the industrial sector should do well in the coming months. Businesses are increasing their spending to support increased production and meet strong demand in the manufacturing, construction, trade and transportation market segments. These industries are adopting digital technology to Improve operational efficiency and promote sustainability by using clean fuels and green practices.
Given the industry’s impressive growth prospects, we believe it may be profitable to invest in quality industrial distribution stocks Fastenal Company (QUICKLY) and WW Grainger, Inc. (GWW).
Click here to view our Industrial Sector Report for 2022
Fastenal Company (QUICKLY)
FAST distributes industrial and construction supplies in the United States, Canada, Mexico, North America and internationally. The Winoma, Minn., company provides fasteners and related industrial and construction supplies under the Fastenal name. FAST also offers miscellaneous supplies and equipment. It serves the manufacturing market, the non-residential construction market, mining companies, retail businesses, oil exploration and refining companies.
In 2021, FAST signed 274 new on-site sites, including 44 signings in the fourth quarter of 2021. As of December 31, FAST had 1,416 active sites, which represents an increase of 11.9% over the previous year. This development boosted the company’s sales as business activity improved through FAST’s on-site customers.
In the fourth quarter of fiscal 2021, ended December 31, 2021, FAST net sales rose 12.8% year over year to $1.53 billion. Its gross profit improved 15.2% from the prior year period to $712.90 million. The company’s operating profit rose 13.8% year-over-year to $300.90 million. FAST’s net income increased 17.9% year-on-year to $231.20 million, and the company’s net earnings per share increased 17.6% year-on-year to $0.40.
The consensus estimate of revenue of $1.68 billion for its first quarter of fiscal 2022, ended March 31, 2022, represents growth of 18.4% over the same period in 2021. The consensus estimate EPS of $0.44 for the quarter to report indicates a 20% year-on-year increase. Not surprisingly, FAST has exceeded consensus EPS estimates in each of the past four quarters.
The stock has gained 11.1% in price over the past month and 17.3% over the past year. It closed yesterday’s trading session at $60.15.
FAST POWR Rankings reflect this promising prospect. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
FAST has a B rating for stability, quality and momentum. Within the industrial equipment industry, it is ranked No. 39 out of 90 stocks.
To see additional POWR (Growth, Value, and Sentiment) ratings for FAST, Click here.
WW Grainger, Inc. (GWW)
GWW is a leading extended range distributor with operations primarily in North America, Japan and the UK. the Lake Forest, Ill., The company also provides services and solutions that include technical support and inventory management. GWW serves businesses, corporations, and government entities through sales, service representatives, and e-commerce and e-commerce channels. The Company operates through two segments: High-Touch Solutions NA; and endless assortment.
In January, GWW declared a cash dividend of $1.62 per share, which was paid to shareholders on March 1, 2022. This reflects the company’s strong financial performance and its ability to return cash to shareholders. .
GWW’s adjusted net sales increased 14% year-over-year to $3.36 billion during its fourth quarter of fiscal 2021, which ended December 31, 2021. Its adjusted gross profit increased 22% in year-on-year to reach $1.25 billion. GWW’s adjusted operating profit improved 41% year-on-year to $417 million. Its adjusted net income rose 43% from its value a year ago to $283 million. And the company’s adjusted earnings per share rose 49% year-over-year to $5.44.
Analysts expect GWW’s revenue for its first quarter of fiscal 2022, ended March 31, 2022, to be $3.50 million, an increase of 13.5% from a year to year. The Street expects the company’s EPS for the quarter ahead to be $6.08, representing a 35.6% year-over-year increase. The company has an impressive track record of earnings surprises; it has exceeded consensus EPS estimates in three of the last four quarters.
GWW shares are up 6% in the past month and 27.2% in the past year. They closed yesterday’s trading session at $519.33.
GWW’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system.
GWW has a B rating for Momentum, Growth, Quality and Stability. Within the industrial equipment industry, it is ranked No. 12 out of 90 stocks.
To see additional POWR (value and sentiment) ratings for GWW, Click here.
Click here to view our Industrial Sector Report for 2022
FAST shares were trading at $59.89 per share on Tuesday afternoon, down $0.26 (-0.43%). Year-to-date, FAST is down -6.00%, compared to a -4.39% rise in the benchmark S&P 500 over the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions. Continued…