Fastenal Co. (FAST) of Winona, Minnesota has earned $56 million or 38 cents per share in the first quarter ended March 31, 2009, compared with $49 million or 33 cents per share in the year-ago period. With this, the company has beaten the Zacks Consensus Estimate of 33 cents per share.

Net sales in the quarter improved 6.4% to $521 million. This was attributable to the increase in the company’s manufacturing customers. Sales to manufacturing customers (accounting for 50% of sales historically) rose 15.7% in the quarter. However, sales to non-residential construction business (accounting for 20%–25% of sales historically) contracted 14.7% in the quarter.

During the quarter, Fastenal opened 29 stores compared with 33 stores in the same quarter a year ago. The company has closed five traditional stores and converted one strategic account store location to a customer-only type. Thus, the company had 2,392 stores on March 31, 2009. The company continues with its plan to maintain historical rate of store openings of 7% to 10% in the second half of 2010.

Fastenal had cash and cash equivalents of $179 million as on March 31, 2010, compared with $110 million as on March 31, 2009. In the quarter, the company had a cash flow of $79 million from operating activities, a decrease from $94 million in the prior-year period. Meanwhile, capital expenditures reduced to $8 million from $19 million in the year-ago period.

Estimate Revision Trends

Over the last 30 days, out of the nine analysts covering the stock, one has upwardly revised his or her estimate for full year 2010, while no one has revised downward. Over the last 7 days, the trend is the same. Therefore, in the absence of any downward revision of estimate, the Zacks Rank for the stock remains #2 (Buy).

With respect to earnings surprises, the stock has performed weakly over the trailing four quarters. The average earnings surprise was minus 5.33%. This implies that Fastenal has missed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

The current Zacks Consensus Estimates for the first quarter and full-year 2010 are profits of 37 cents and $1.51, respectively. The upside potential of these estimates, essentially a proxy for future earnings surprises, currently stands at zero.

Based on the improved results, the stock price of Fastenal elevated more than 3% to $53.50 in the afternoon.