FASTENAL CO (FAST) Stock Analysis
FASTENAL CO (FAST) Stock Analysis
Overall Grade: F (Concerning)
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FASTENAL CO faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 33.7% | Above industry average |
| FCF Margin | 12.8% | Healthy cash flow |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 33.7% suggests durable competitive advantages and efficient capital allocation.
What is FASTENAL CO's Profitability and ROIC?
FASTENAL CO generates strong returns on invested capital at 33.7%, indicating efficient capital allocation and competitive advantages. Gross margin of 45.0% with operating margin at 20.2% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 33.7% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | 33.2% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 45.0% | Good | Strong pricing power |
| Operating Margin | 20.2% | Excellent | Efficient operations |
How Strong is FASTENAL CO's Cash Flow Quality?
FASTENAL CO generated $1.1B in free cash flow over the trailing twelve months, representing a 12.8% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.0x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 12.8% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $1.1B | Good | Positive cash generation |
| OCF/Net Income | 1.0x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is FASTENAL CO's Financial Health?
FASTENAL CO maintains a net cash position of $151.8M, providing significant financial flexibility.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
| Net Cash Position | $151.8M | Excellent | Net cash positive |
Is FASTENAL CO Stock Overvalued or Undervalued?
FASTENAL CO trades at a P/E of 29.5x, representing a premium to the sector median of N/A. Free cash flow yield of 2.6% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 29.5x | Adequate | Premium valuation |
| EV/Sales | 5.9x | Adequate | Growth premium priced in |
| FCF Yield | 2.6% | Adequate | Lower cash yield |
| Dividend Yield | 2.2% | Adequate | Growth focus over income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 33.7% | Top 25% | 3.5x above |
| Free Cash Flow Margin | 12.8% | Top 10% | 4.0x above |
| Gross Margin | 45.0% | Top 50% | 1.1x above |
| Operating Margin | 20.2% | Top 10% | 4.1x above |
| Return on Equity (ROE) | 33.2% | Top 25% | 2.7x above |
| P/E Ratio | 29.5x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 33.7% (Excellent - Top 25% of sector (median: 9.8%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 12.8% (Good - Top 10% of sector (median: 3.2%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 45.0% (Good - Top 50% of sector (median: 40.9%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 3.2% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 29.5x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 2.6% (Warning)
Frequently Asked Questions
Q: What is FASTENAL CO's Return on Invested Capital (ROIC)?
FASTENAL CO (FAST) has a trailing twelve-month Return on Invested Capital (ROIC) of 33.7%. This compares above the sector median of 9.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is FASTENAL CO's Free Cash Flow Margin?
FASTENAL CO (FAST) has a free cash flow margin of 12.8%, generating $1.1 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is FASTENAL CO stock overvalued or undervalued?
FASTENAL CO (FAST) trades at a P/E ratio of 29.5x, which is above the sector median of N/A. The EV/Sales multiple is 5.9x. Free cash flow yield is 2.6%, reflecting growth expectations priced into the stock.
Q: Does FASTENAL CO pay a dividend?
FASTENAL CO (FAST) currently pays a dividend yield of 2.2%. Including share buybacks, the total shareholder yield is 2.2%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is FASTENAL CO's revenue and earnings growth?
FASTENAL CO (FAST) grew revenue by 8.7% year-over-year. Earnings per share increased by 7.1% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: How does FASTENAL CO compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, FASTENAL CO (FAST) shows: ROIC of 33.7% is above the sector median of 9.8% (Top 11%). FCF margin of 12.8% exceeds the sector median of 3.2% (Top 7% of sector). Gross margin at 45.0% is 4.2 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with FASTENAL CO?
Investors in FASTENAL CO (FAST) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-16. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.