Stock of the Day

August 31, 2020

Fastenal (FAST)

$45.49
-$1.18 (-2.5%)
Market Cap: $52.22B

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The company's fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers that are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including pins, machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations customers; non-residential construction market; farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

Fastenal Bull Case

Here are some ways that investors could benefit from investing in Fastenal:

  • The current stock price is around $46.51, which is near the average price target set by analysts, indicating potential for growth.
  • Fastenal reported a revenue increase of 12.4% year-over-year, showcasing strong business performance and demand for its products.
  • The company has a solid return on equity of 33.25%, reflecting effective management and profitability relative to shareholder equity.
  • Fastenal has a consistent dividend payout, recently increasing its quarterly dividend to $0.26, which provides a reliable income stream for investors.
  • With a market capitalization of $53.40 billion, Fastenal is a well-established player in the industrial supply sector, offering stability and growth potential.

Fastenal Bear Case

Investors should be bearish about investing in Fastenal for these reasons:

  • The stock has a relatively high price-to-earnings ratio of 40.80, which may indicate that it is overvalued compared to its earnings.
  • Fastenal's net margin of 15.39% suggests that while it is profitable, there may be concerns about cost management and pricing pressures in the future.
  • Analysts have mixed ratings on the stock, with four Buy ratings, eight Hold ratings, and two Sell ratings, indicating uncertainty in market sentiment.
  • The company’s dividend payout ratio is currently 84.21%, which is high and may limit its ability to reinvest in growth opportunities.
  • Fastenal's earnings per share (EPS) for the current year is projected to be lower than the previous year, which could signal slowing growth.
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