FASTENAL COMPANY: Quietly Printing Money in the Boring But Lucrative Industrial Supply Industry
March 2, 2023
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FASTENAL ($NASDAQ:FAST): O n e c o m p a n y t h a t q u i e t l y f i t s t h i s d e s c r i p t i o n i s F a s t e n a l C o m p a n y ( F A S T ) . I t h a s b u i l t a l a r g e a n d l o y a l c u s t o m e r b a s e b y o f f e r i n g a w i d e r a n g e o f f a s t e n i n g a n d o t h e r p r o d u c t s a t c o m p e t i t i v e p r i c e s . O v e r t h e y e a r s , F a s t e n a l h a s a l s o i n v e s t e d h e a v i l y i n t e c h n o l o g y a n d a u t o m a t i o n t o i m p r o v e i t s b u s i n e s s p r o c e s s e s a n d p r o v i d e c u s t o m e r s w i t h a n e n h a n c e d s h o p p i n g e x p e r i e n c e . T h e c o m p a n y ‘ s i m p r e s s i v e f i n a n c i a l p e r f o r m a n c e i s t e s t a m e n t t o i t s e f f i c i e n t b u s i n e s s m o d e l . F a s t e n a l g e n e r a t e d $ 4 . 3 % . T h i s i s s i g n i f i c a n t l y h i g h e r t h a n i t s p e e r s , w h i c h s t r o n g l y i n d i c a t e s t h a t F a s t e n a l i s e f f e c t i v e l y l e v e r a g i n g i t s c a p i t a l .
T h e c o m p a n y h a s a l s o b e e n a b l e t o g e n e r a t e s u b s t a n t i a l f r e e c a s h f l o w s , a l l o w i n g i t t o p a y o f f $ 1 . 2 b i l l i o n i n d e b t o v e r t h e l a s t f i v e y e a r s . F a s t e n a l ‘ s i m p r e s s i v e f i n a n c i a l p e r f o r m a n c e i s r e f l e c t e d i n i t s s t o c k p r i c e , w h i c h h a s m o r e t h a n d o u b l e d o v e r t h e p a s t f i v e y e a r s . O v e r a l l , F a s t e n a l C o m p a n y i s a g r e a t e x a m p l e o f P e t e r L y n c h ’ s i d e a o f i n v e s t i n g i n u n d e r v a l u e d c o m p a n i e s w i t h s t r o n g f i n a n c i a l s . I t s l o n g h i s t o r y o f s u c c e s s i s a n i n d i c a t i o n t h a t i t i s w e l l – p o s i t i o n e d t o c o n t i n u e o u t p e r f o r m i n g i n t h e i n d u s t r i a l a n d c o n s t r u c t i o n s u p p l y i n d u s t r y.
Market Price
Tuesday was a good day for FASTENAL COMPANY, as the stock opened at $51.5 and closed at $51.6, showing a slight uptick in the market. The industrial supply company is quietly printing money from its boring but lucrative industry, and its stock price is reflective of this. FASTENAL COMPANY has an impressive track record of performance and stability, even in times of economic uncertainty.
It is clear that investors are content with their investment in the company, as the stock showed no signs of fluctuation during the trading day. The company is continuing to expand its reach and market-share, making it an attractive long-term investment for discerning investors. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Fastenal Company. More…
| Total Revenues | Net Income | Net Margin |
| 6.98k | 1.09k | 15.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Fastenal Company. More…
| Operations | Investing | Financing |
| 941 | -163 | -774.9 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Fastenal Company. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 4.55k | 1.39k | 5.52 |
Key Ratios Snapshot
Some of the financial key ratios for Fastenal Company are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 9.4% | 11.2% | 20.8% |
| FCF Margin | ROE | ROA |
| 11.0% | 28.7% | 20.0% |
Analysis
As GoodWhale, I have conducted an analysis of FASTENAL COMPANY‘s financials. According to the Star Chart, FASTENAL COMPANY is strong in asset, dividend, growth and profitability. This has allowed the company to be classified as a ‘gorilla’, i.e. one that has achieved stable and high revenue or earning growth due to its strong competitive advantage. Investors who prefer companies with strong competitive advantages and are looking for stable returns may find FASTENAL COMPANY a suitable choice. Furthermore, the company has a health score of 10/10, which suggests that it is capable of riding through any crisis or economic downturn without risk of bankruptcy. More…
Peers
Fastenal Co is a leading company in the fastener industry and competes with WESCO International Inc, DXP Enterprises Inc, and W.W. Grainger Inc. All four companies are leaders in their respective fields and have a long history of competition.
– WESCO International Inc ($NYSE:WCC)
WESCO International Inc. is a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced logistics services. The company serves commercial and industrial customers in more than 90 countries. WESCO operates through 11 regional businesses, each with a dedicated team of experts that understands the unique needs of the local market.
WESCO has a market cap of $6.47B as of 2022 and a ROE of 16.97%. The company is a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced logistics services. WESCO operates through 11 regional businesses, each with a dedicated team of experts that understands the unique needs of the local market.
– DXP Enterprises Inc ($NASDAQ:DXPE)
DXP Enterprises is a leading provider of integrated maintenance, repair and operations solutions that enable our customers to operate more efficiently and effectively. We are a trusted partner to a broad range of customers in the industrial, energy and other markets, and our mission is to make our customers’ operations more productive, efficient and sustainable.
DXP’s market cap is $483.23M as of 2022. The company has a Return on Equity of 14.04%.
DXP provides a broad range of MRO solutions that help our customers improve their operations. Our products and services include bearings, power transmission, fluid power, tools and equipment, and general maintenance supplies. We also offer a full range of repair and maintenance services, including on-site repairs, field services, and machine tool services. In addition, we offer a wide range of value-added services, such as inventory management, just-in-time delivery, and kitting and assembly.
– W.W. Grainger Inc ($NYSE:GWW)
W.W. Grainger Inc is a Fortune 500 company that provides maintenance, repair and operating supplies and equipment to businesses and institutions worldwide. With a market cap of 27.04B as of 2022 and a Return on Equity of 56.81%, it is clear that the company is doing well. The company has a long history dating back to 1927 and has been a reliable source for businesses and institutions for many years.
Summary
FASTENAL Company is a great investment opportunity in the industrial supply industry. Its products are highly sought after, and the company has established an impressive track record of consistent growth. The company’s innovative and efficient operating strategies have enabled it to increase its earnings year after year. FASTENAL’s consistent sales growth, cost control, and improved margins have resulted in strong free cash flow, which has enabled the company to generate attractive returns for investors.
With its powerful balance sheet, FASTENAL is well-positioned to take advantage of attractive acquisitions, which are expected to drive increased profitability in the future. The company looks well-positioned for continued success in the future.
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