Stock of the Day

August 31, 2020

Fastenal (FAST)

$74.78
-$0.36 (-0.5%)
Market Cap: $43.09B

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:

  • Fastenal has a strong return on equity of 32.55%, indicating effective management and profitability relative to shareholder equity.
  • The company recently increased its quarterly dividend to $0.43, reflecting a commitment to returning value to shareholders, with an annualized yield of 2.33%.
  • Fastenal's revenue grew by 3.7% year-over-year, demonstrating resilience and potential for continued growth in a competitive market.
  • The current stock price is around $75.09, which is within a reasonable range compared to its 12-month high of $84.88, suggesting potential for appreciation.
  • With a quick ratio of 2.28 and a current ratio of 4.67, Fastenal shows strong liquidity, meaning it can easily meet its short-term obligations.

Fastenal Bear Case

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

  • The company reported earnings per share of $0.46, missing analysts' expectations of $0.48, which may raise concerns about its ability to meet future earnings targets.
  • Fastenal's dividend payout ratio is currently 85.57%, which is relatively high and may limit the company's ability to reinvest in growth opportunities.
  • Recent analyst downgrades, including a reduction in target price to $70.00, indicate a lack of confidence in the stock's near-term performance.
  • With a debt-to-equity ratio of only 0.03, while this indicates low leverage, it may also suggest that the company is not taking advantage of potential growth through debt financing.
  • Market sentiment appears mixed, with two analysts rating the stock as a sell, which could indicate potential downward pressure on the stock price.

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