Grainger and Fastenal Stock Prices Hit Minor Turbulence on 3Q 2013 Financials

Despite showing positive growth over the past nine months and last quarter, the financials recently released by two MRO-oriented distributors that sell an awful lot of electrical supplies got mixed reviews on Wall Street.

W.W. Grainger Inc., Lake Forest, Ill., reported that its sales of $2.4 billion increased 5% versus $2.3 billion in results for 3Q 2012. For the nine months ended Sept. 30, sales of $7.1 billion increased 5% versus $6.7 billion in the nine months ended Sept. 30, 2012. Fastenal, Winona, Minn., saw its year-over year sales for 3Q 2013 increase 7% to $858.4 million. Over the first nine months of 2013, the company’s sales of $2.5 billion are up 5.7% over the first three quarters of 2012.

Fastenal said in a press release that its sales growth during the last quarter “was held back partially due to the global economic uncertainty combined with economic policy uncertainty in the United States.”

Jim Ryan, Grainger’s chairman, president and CEO also said in a press release that macroeconomic conditions had an unfavorable impact on Grainger’s 3Q financials.  "Despite a challenging environment, our U.S. business delivered solid volume growth and earnings that were in line with our expectations,” he said. “Our businesses outside of the United States remain affected by weaker macroeconomic conditions and unfavorable foreign exchange rates.

“We are continuing to aggressively invest for the future with $135 million in incremental growth spending planned for 2013 designed to build additional scale and accelerate our market share gains.  Given our commitment to our growth investments, coupled with the continuing headwinds of a softer global economy and stronger U.S. dollar, we are narrowing our guidance range for full year 2013."

Both companies saw their share prices slump after their 3Q 2013 financial reports. Grainger’s adjusted share price of $257.77 on Oct. 16 is down 4.5% over the past month but is still up a healthy 25.5% YTD and 24.8% YTY. Fastenal’s adjusted share price of $48.73 at the close of business on Oct. 16 is down 3.1% over the past month, but is up 2.3% YTD and 11.1% YTY. Both stocks are off their 52-week highs. At mid-day Oct. 17, Grainger was down 5.9% and Fastenal was down 9% off their 52-week highs. Both stocks are currently trading at slightly under their 50-day moving averages.