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With a market cap of $38 billion, Fastenal Company (FAST), based in Winona, Minnesota, is a leading national distributor of industrial and construction supplies, operating primarily through company-owned stores in North America.
Shares of Fastenal have underperformed the broader market slightly over the past year. FAST has surged 16.3% over this time frame, while the broader S&P 500 Index ($SPX) is up 19.6%. In 2024, the stock gained 2.5%, compared to SPX’s 12% return on a YTD basis.
Narrowing the focus, FAST has surpassed the S&P 500 Industrial Sector SPDR’s (XLI) 14% returns over the past year.
Fastenal’s poor price momentum stems from slow sales and a downturn in the industrial sector, as well as challenges from unfavorable weather conditions.
However, the stock has rallied nearly 8% in the subsequent trading sessions following the release of its Q2 earnings report. The company met its EPS and revenue estimates and anticipates better sales trends in the latter half of 2024 and into 2025, fueled by robust customer acquisition efforts. Despite a challenging economic environment, as reflected by a sub-50 ISM Index, Fastenal upheld a strong balance sheet and healthy operating cash flow.
For the current fiscal year, ending in December, analysts expect Fastenal’s EPS to rise 1.5% year over year to $2.05. However, the company’s earnings surprise history is mixed. It exceeded or matched the consensus estimate in three of the last four quarters while missing on one other occasion.
Fastenal stock has a consensus “Hold” rating overall. Out of 12 analysts covering the stock, two rate it as a "Strong Buy," eight suggest a “Hold,” and two advise a "Strong Sell.”
This configuration has been stable over the past months.
On July 15, Stifel Financial Corp. (SF) lowered Fastenal's price target from $85 to $80 but retained a “Buy” rating. The analyst expects the company to benefit from improved growth in Onsite and FMI signings in the second half, supporting market share growth and gains towards its historical range of 5% to 6%.
While FAST currently trades above its mean price target of $66.11, the Street-high target of $80 represents an upside potential of 20.5% from the prevailing price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
