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1. Company Snapshot

1.a. Company Description

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, which 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; and non-residential construction market, which includes general, electrical, plumbing, sheet metal, and road contractors.It also serves 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.


The company distributes its products through a network of 3,209 in-market locations and 15 distribution centers.Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

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1.b. Last Insights on FAST

Fastenal's recent performance was negatively impacted by its Q3 earnings and sales miss, with EPS of $0.29 per share, falling short of the Zacks Consensus Estimate of $0.3 per share. The company's revenue was in line with expectations, but profit margins rose year-over-year. Valuation concerns and analysts' sentiment have also weighed on the stock. Despite strong revenue and earnings growth, driven by robust demand and price increases, the stock's rich 42x forward earnings multiple has raised concerns. The company's 26-year dividend growth streak remains intact, but the latest increase was modest.

1.c. Company Highlights

2. Fastenal's Q3 2025 Earnings: Strong Sales Growth and Expanding Margins

Fastenal Company reported a strong Q3 2025 with net sales of $2.13 billion, an 11.7% increase over Q3 of last year, marking the second consecutive quarter above the $2 billion mark. The growth came from pricing, which contributed roughly 2.5 percentage points, and volume and share gains, with daily sales growth at 11.2%. Net income rose 12.6%, and EPS increased 12.3% to $0.29 per share, with an operating margin of 20.7%. The company's gross margin was 45.3%, up 40 basis points from the year-ago period.

Publication Date: Oct -16

📋 Highlights
  • Net Sales Surge:: Q3 sales hit $2.13B, up 11.7% YoY, with daily sales growth of 11.2% driven by pricing and volume gains.
  • Large Account Growth:: High-spend customer sites (>$50K/month) grew 15.4%, outpacing the 8.1% growth for <$10K/month sites.
  • Digital Sales Momentum:: FMI technology contributed 45.3% of total sales, with 110 FMI signings daily, enhancing service efficiency.
  • Profitability Expansion:: Operating margin rose to 20.7% (+40 bps YoY), while EPS increased 12.3% to $0.29, reflecting cost discipline.
  • Inventory & Cash Flow:: Inventory grew 10.5%, and AP surged 143.3%, but operating cash was $386.9M (115.3% of net income), highlighting strong liquidity.

Segment Performance and Digital Momentum

The company saw significant gains in large accounts, with active customer sites spending over $10,000 per month growing 8.1%, and those spending over $50,000 per month growing 15.4%. Fastenal's digital engines also showed momentum, with FMI signings averaging 110 per day, and sales through FMI technology representing 45.3% of total sales. The Americas business outside the US, particularly in Mexico, had a tough year due to a sub-50 ISM, but the company is working to improve visibility into its business segments.

Operational Efficiency and Cash Flow

The company's SG&A expense was 24.6% of sales, consistent with the year-ago period, as employee-related expenses increased due to the reset of bonus and commission programs, offset by leverage in other SG&A costs. Operating cash was $386.9 million, or 115.3% of net income, with a five-year average of 104.2%. The company generated significant cash and had a conservatively capitalized balance sheet with quarter-end debt being 4.8% of total capital.

Valuation and Outlook

With a P/E Ratio of 40.84 and an EV/EBITDA of 27.93, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 9.2%. The company's ROIC is 26.85%, indicating a strong return on invested capital. Fastenal's pricing actions were delayed, resulting in a lower impact on the quarter, but with better discussions with customers and more effective pricing. The company expects profit growth to continue until it anniversaries the current growth period, moving into the second quarter of next year.

Market Conditions and Future Prospects

The market conditions remain sluggish due to trade and policy uncertainty. The company does not see a tailwind in Q4 but expects potential growth in 2026. The fastener stocking initiative aims to gain share through better service levels by having standard inventory available, and is accretive to ROIC. The company's gross margin is expected to drop in Q4 but remain flat for 2025 compared to 2024, driven by the expansion project.

3. NewsRoom

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Groupe la Francaise Buys 79,090 Shares of Fastenal Company $FAST

Dec -04

Source: defenseworld.net

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Fastenal Company $FAST Shares Bought by Associated Banc Corp

Nov -26

Source: defenseworld.net

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Fastenal Company $FAST Shares Purchased by Advisors Asset Management Inc.

Nov -26

Source: defenseworld.net

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Bahl & Gaynor Inc. Buys 990,085 Shares of Fastenal Company $FAST

Nov -22

Source: defenseworld.net

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Fastenal Company $FAST Shares Purchased by Bank Julius Baer & Co. Ltd Zurich

Nov -22

Source: defenseworld.net

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Allworth Financial LP Buys 9,731 Shares of Fastenal Company $FAST

Nov -16

Source: defenseworld.net

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Fastenal Company & Edmonton Oilers Enter Multi-Year Agreement

Nov -12

Source: businesswire.com

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3 Buy-And-Forget Dividend Stocks With Snowballing Payouts

Nov -11

Source: 247wallst.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

United States (u.s)

Expected Growth: None%

None

Other

Expected Growth: 8.0%

The 'Other' segment is expected to grow at a rate close to the global average. This is because it includes a mix of different business activities, some of which may grow faster than the average (like certain international markets) while others may grow slower. The overall growth rate reflects a balanced mix of opportunities and challenges across these diverse activities.

7. Detailed Products

Fasteners

Fastenal offers a wide range of fasteners including nuts, bolts, screws, washers, and rivets from top manufacturers.

Fastening Tools

Fastenal provides a variety of fastening tools including drills, drivers, wrenches, and pliers from leading brands.

Cutting Tools

Fastenal offers a range of cutting tools including saw blades, drill bits, and cutting fluids from reputable manufacturers.

Material Handling

Fastenal provides material handling solutions including bins, containers, and storage systems to help organize and manage inventory.

Janitorial and Sanitation

Fastenal offers a range of janitorial and sanitation products including cleaning supplies, trash bags, and personal protective equipment.

Packaging and Shipping

Fastenal provides packaging and shipping solutions including boxes, tape, and labels from leading manufacturers.

Safety and Protection

Fastenal offers a range of safety and protection products including hard hats, gloves, and safety glasses from top brands.

MRO (Maintenance, Repair, and Operations) Supplies

Fastenal provides MRO supplies including lubricants, adhesives, and sealants from reputable manufacturers.

8. Fastenal Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Fastenal's products are highly specialized and customized, making it difficult for customers to find substitutes. Additionally, the company's strong relationships with suppliers and its ability to provide a wide range of products reduce the threat of substitutes.

Bargaining Power Of Customers

Fastenal's customers are primarily large industrial companies, which can exert some bargaining power due to their size and purchasing power. However, Fastenal's ability to provide customized solutions and its strong relationships with customers mitigate this power.

Bargaining Power Of Suppliers

Fastenal has a diverse supplier base and is not heavily dependent on any one supplier. Additionally, the company's strong relationships with suppliers and its ability to negotiate prices reduce the bargaining power of suppliers.

Threat Of New Entrants

The industrial distribution industry has high barriers to entry, including the need for significant capital investment and a large network of suppliers and customers. Fastenal's strong brand recognition and established relationships with customers and suppliers make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The industrial distribution industry is highly competitive, with many established players competing for market share. Fastenal competes with other large distributors, as well as smaller, specialized players, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.61%
Debt Cost 4.24%
Equity Weight 90.39%
Equity Cost 9.01%
WACC 8.55%
Leverage 10.64%

11. Quality Control: Fastenal Company passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TransDigm Group

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Growth: 7.9

Quality: 6.7

Yield: 9.0

Momentum: 4.0

Volatility: 8.0

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MSC Industrial Direct Co

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A-Score: 6.1/10

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Quality: 7.8

Yield: 5.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

41.5$

Current Price

41.5$

Potential

-0.00%

Expected Cash-Flows