Fastenal (FAST) nails earnings

Sectors of the economy may be coming apart at the seams, but Fastenal Company (NASDAQ: FAST), distributor of nuts, bolts and all kinds of tools, is holding together nicely. Fastenal reported strong numbers for 2Q 2008. Net sales increased 16% to $604,000. (Hey, I never said this stock would topple Home Depot). More importantly, net earnings increased 26% to $76,000 and diluted EPS increased 25% to $0.51. As part of its "Pathway to Profit Initiative," Fastenal opened 112 new stores in Q1 & Q2, bringing total store locations to over 2100.

Like most other businesses, Fastenal has been hit by both the slowdown in the construction industry and the rapid rise in fuel costs. The company is reorganizing its freight service to take advantage of fuel and cost savings by using its own trucking network rather than external service providers. Additionally, the company established a centralized call center to manage accounts receivable company-wide. As a result, accounts receivable increased 14% at the same time the company reduced its bad debt expense. Fastenal repurchased 200,000 shares with plans to buy back more. The company also declared a quarterly dividend of $0.27 per share. YTD the stock has gained 14% and currently trades around $46. This one is worth a look.