Briefing From The Editor -- FAST Stock

Now trading at a price of $64.64, Fastenal Company has moved -0.1% so far today.

Fastenal Company returned gains of 34.9% last year, with its stock price reaching a high of $65.33 and a low of $45.7. Over the same period, the stock outperformed the S&P 500 index by 12.0%. More recently, the company's 50-day average price was $60.19. Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, and internationally. Based in Winona, MN, the large-cap Consumer Discretionary company has 20,284 full time employees. Fastenal Company has offered a 2.1% dividend yield over the last 12 months.

The Business Has Operating Margins Consistently Higher Than the 13.85% industry Average:

2018 2019 2020 2021 2022 2023
Revenue (MM) $4,965 $5,334 $5,647 $6,011 $6,981 $7,284
Revenue Growth n/a 7.42% 5.88% 6.44% 16.13% 4.34%
Operating Margins 20% 20% 20% 20% 21% 21%
Net Margins 15% 15% 15% 15% 16% 16%
Net Income (MM) $752 $791 $859 $925 $1,087 $1,134
Net Interest Expense (MM) $13 $14 $10 $10 $14 $14
Depreciation & Amort. (MM) $134 $145 $153 $160 $166 $168
Earnings Per Share $1.31 $1.38 $1.49 $1.6 $1.89 $2.01
EPS Growth n/a 5.34% 7.97% 7.38% 18.12% 6.35%
Diluted Shares (MM) 574 574 576 577 576 564
Free Cash Flow (MM) $498 $596 $934 $614 $767 $1,201
Capital Expenditures (MM) $176 $246 $168 $157 $174 $179
Current Ratio 5.3 4.51 4.08 4.19 3.96 4.71
Total Debt (MM) $500 $345 $405 $390 $394 $260
Net Debt / EBITDA 0.29 0.14 0.12 0.11 0.1 -0.02

Fastenal Company benefits from strong margins with a stable trend, low leverage, and growing revenues and decreasing reinvestment in the business. The company's financial statements show positive EPS growth and irregular cash flows.

Fastenal Company's P/B and P/E Ratios Are Higher Than Average:

Fastenal Company has a trailing twelve month P/E ratio of 30.4, compared to an average of 22.96 for the Consumer Discretionary sector. Based on its EPS guidance of $2.13, the company has a forward P/E ratio of 28.3. The 7.2% compound average growth rate of Fastenal Company's historical and projected earnings per share yields a PEG ratio of 4.23. This suggests that these shares are overvalued. Furthermore, Fastenal Company is likely overvalued compared to the book value of its equity, since its P/B ratio of 10.65 is higher than the sector average of 4.24. The company's shares are currently trading 290.8% above their Graham number. Overall, Fastenal Company's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Analysts Give Fastenal Company an Average Rating of Hold:

The 9 analysts following Fastenal Company have set target prices ranging from $56.0 to $66.0 per share, for an average of $59.56 with a hold rating. As of April 2023, the company is trading 1.1% away from its average target price, indicating that there is an analyst consensus of little upside potential.

Fastenal Company has an average amount of shares sold short because 3.6% of the company's shares are sold short. Institutions own 82.9% of the company's shares, and the insider ownership rate stands at 0.17%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $4,500,604,946.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.