Fastenal Company (NASDAQ: FAST) fell short of Wall Street's second-quarter earnings expectations, with the industrial supply firm confessing to a 43% slide in net profit for the period. Specifically, FAST raked in earnings of $43.5 million, or 29 cents per share, while revenue dwindled 21% to $474.9 million. Analysts were looking for a more robust quarterly profit of 33 cents per share on $487 million in revenue.
"As we saw in the previous two quarters, the weakened economy continues to have a substantial impact on our business," reported Fastenal in a press release. "These impacts continue to negatively affect our sales, particularly related to our industrial production business . . . and, more recently, our non-residential construction business."
FAST fell nearly 8% this morning before touching an intraday nadir of $29.25, but the shares have since pared their losses. The equity has reclaimed a foothold above key support at the $30 level, though resistance looms close at hand from FAST's 10-day and 20-day moving averages. These trendlines have guided the shares consistently lower since June 12.
The stock's quick rebound from its post-report plunge could be the result of heavy investor skepticism heading into the report. During the past 10 days, the International Securities Exchange (ISE) reports that option traders have bought to open 4.37 times more puts than calls on FAST. This hefty ratio ranks in the 78th annual percentile, indicating that speculative investors have snapped up puts over calls at a faster pace just 22% of the time during the past year.
In the same vein, short interest represents a healthy 16.8% of the stock's available float, or 11.3 times FAST's average daily trading volume. Some of these bears might have been encouraged to take profits in the wake of today's plunge, effectively curbing the security's slide.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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