The Zacks Analyst Blog Highlights: Fastenal, Williams Partners L.P., Williams Companies, Enterprise Products Partners LP and Kinder Morgan Energy Partners, L.P.

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Jul 13, 2011, 09:30 ET

CHICAGO, July 13, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Fastenal Co. (Nasdaq: FAST), Williams Partners L.P. (NYSE: COP), Williams Companies Inc. (NYSE: WMB), Enterprise Products Partners LP (NYSE: EPD) and Kinder Morgan Energy Partners, L.P. (NYSE: KMP).

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Here are highlights from Tuesday's Analyst Blog:

Fastenal Co. (Nasdaq: FAST) posted a 36% increase in profit to $94.1 million in the second quarter of the year from $69.2 million a year-ago.

On a per share basis, profit improved 39% to 32 cents from 23 cents a year ago, nearly meeting the Zacks Consensus Estimate of 31 cents.

Sales in the quarter rose 23% to $701.7 million, higher than the Zacks Consensus Estimate of $699 million. Gross profit during the quarter increased 23% to $366.2 million (52.2%) from $297.7 million (52.1%) in the second quarter of 2010.

The increase in sales was due to aggressive store openings and an increase in the company's non-residential customers, accounting for 20%–25% of sales historically. Sales to non-residential construction increased to 15.8% from 0.5% in the same quarter last year. Meanwhile, sales to manufacturing customers (accounting for 50% of sales historically) declined to 18.5% from 29.8% a year ago.

During the first half of 2011, Fastenal opened 75 stores compared with 45 stores in the same period of 2010. The company had 2,565 stores as of June 30, 2011. During each of the first six months of 2011 and 2010, the company closed seven stores. The company intends to open 80 to 95 stores during the second half of 2010 (which is equivalent to an annualized rate of 6.8% to 8.0%).

Fastenal had cash and cash equivalents of $89.4 million as on June 30, 2011 compared with $143.7 million as on December 31, 2010.

In the first half of the year, the company had a cash flow of $101.3 million from operating activities, a decline from $119.6 million in the prior-year period. Despite an improvement in profit, cash flow declined primarily due to increases in trade accounts receivable and inventories. Meanwhile, capital expenditures (net) increased to $54.7 million from $30.1 million in the year-ago period.

Fastenal has a widespread customer base. The company's large number of customers belong to varied markets, which protects its market position in tough economies. Further, the company has employed a hub and spoke model along with the opening of new stores and service centers to ensure efficient customer service in all aspects. Under the Pathway to Profit growth strategy, the company aims to push sales of its average store to 100,000-$110,000 per month by 2013.

These factors have led the company to maintain a Zacks #2 Rank on its stock, which translated to a short-term (1–3 months) rating of Buy.

Williams Partners Wins Permit

Williams Partners L.P. (NYSE: WPZ) got a nod from the Federal Energy Regulatory Commission (FERC) for the expansion of its Transco natural gas pipeline to serve evolving markets in the Mid-Atlantic region.

The Mid-Atlantic Connector expansion project is slated to be operational by November next year, with 142,000 dekatherms (1.38 billion cubic feet) of additional transportation capacity to serve the regional market.

The expansion, which will cost about $55 million, involves approximately three miles of new pipeline and the upgrade of compressor facilities in Virginia. The project was planned with the main aim of connecting the Transco pipeline with East Tennessee Natural Gas in Rockingham County for power generation and local distribution. Upon completion, it will meet the growing demand for clean energy in this fast developing region.

The 10,000-mile Transco currently has a capacity of about 9.6 million dekatherms (9.3 billion cubic feet) per day and serves the Southeast, Mid-Atlantic and Northeast markets.

Williams Partners is an energy master limited partnership engaged in the gathering, transportation, treating, and processing of natural gas as well as fractionation and storage of natural gas liquids. We believe William Partners is well positioned for future growth, owing to its geographically diverse assets, a sizable project backlog as well as its sound distribution history.

The partnership's gas pipeline and midstream businesses continue to progress on a number of ongoing organic expansion projects, along with major growth initiatives in the Gulf of Mexico over the next two years. The general partner is owned and managed by Williams Companies Inc. (NYSE: WMB).

Williams Partners, which retains a Zacks #4 Rank (short-term Sell rating), competes with Enterprise Products Partners LP (NYSE: EPD) and Kinder Morgan Energy Partners, L.P. (NYSE: KMP).

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