Earnings Preview: Fastenal Company likely to report higher Q2 sales and profit

Fastenal Company (NASDAQ: FAST), a leading provider of industrial and construction supplies, is set to publish its second-quarter results next week. The company is among the hardest hit by the new import tariffs as a substantial share of its products are imported from other countries. The supply-chain-related cost escalation has forced the management to raise prices, mainly in the fastener segment that accounts for about one-third of the total business.

Stock Peaks

Last week, Fastenal’s stock hit a record high, after growing about 18% since the beginning of the year. FAST consistently outperformed the broad market during that period. While the company has a good track record of maintaining profitable growth, the stock looks expensive at the current price.

Fastenal’s second-quarter report is scheduled for release on Monday, July 14, at 6:50 am ET. On average, analysts following the company estimate earnings of $0.28 per share for the June quarter, on revenues of $2.07 billion. In the year-ago quarter, the company earned $0.25 per share on revenues of $1.92 billion.

Key Metrics

For the first three months of fiscal 2025, Fastenal reported net income of $298.7 million or $0.52 per share, broadly unchanged from $297.7 million or $0.52 per share the company reported in the same period of 2024. Net sales moved up 3% year-over-year to $1.96 billion in the first quarter, with net daily sales increasing 5%. At the end of the quarter, Fastenal had 129,996 weighted FMI devices. Both revenue and earnings were in line with Wall Street’s expectations.

“We have increased inventory as part of our effort to improve product availability in our in-market locations and improve picking efficiencies in our hubs. We have added stock to support customer growth, including expected incremental growth in the warehousing space, and we accelerated some inventory scheduled for future delivery in the current periods ahead of potential tariffs. Inventory growth may remain elevated in 2025 as we continue to navigate tariffs and as more inflation builds in inventory,” said Fastenal’s CEO Holden Lewis during his post-earnings interaction with analysts.

Strategy

The company recently raised the prices of certain products to deal with the impact of new import tariffs. The unique business model has enabled it to constantly expand its customer base. The client retention rate is high due to the convenience offered by technologically advanced products and customizable industrial vending machines. That allows businesses to operate more effectively.

On Monday, Fastenal’s stock traded lower in the early hours of the session, after opening almost flat. In the past three months, the stock traded consistently above its 12-month average price.