Peak Earnings Fears Loom Over Industrials
Higher costs and gross margin disappointment for Fastenal, the distributor of factory-floor basics, send up caution flags for its customers.
Welcome to the obstacle course.
Photographer: Dean Mouhtaropoulos/Getty Images
Earnings season is going to be an obstacle course for industrial companies.
Swollen profit estimates and high valuations have left companies with little wiggle room as they combat trade tensions and higher bills for everything from materials to labor and freight. Economic data point to generally strong industrial spending for the time being, but investors are looking for any sign that we might be nearing a peak in earnings. Fastenal Co. — a distributor of factory-floor basics whose results are often a harbinger for its industrial customers, which report in the coming weeks — unofficially kicked things off on Wednesday. The subsequent stock drop is an ominous sign.