Categories Analysis, Industrials

FAST Stock: Fastenal’s long-term prospects intact. Should you invest now?

The company signed 274 onsite locations in the whole of 2021, taking the total number of active sites to 1,416

Production disruption and logistics issues continue to have a crippling effect on the industrial sector but the performance of companies, in general, has been mixed so far. Fastenal Company (NASDAQ: FAST), a leading distributor of industrial and construction supplies, has remained surprisingly stable during the pandemic, affirming the underlying strength of its business.

Fastenal’s encouraging financial performance in the most recent quarter is a testament to the steady recovery the industrial sector is witnessing. The company’s shares had a strong start to the year, after peaking in early December. But the stock withdrew since then, which the market had expected amid concerns of high valuation. Though FAST has become cheaper after the recent dip, it remains slightly risky.


Fastenal Company Q4 2021 Earnings Call Transcript


The current target price indicates a 2% decline this year, which calls for caution as far as investing is concerned. However, the stock still looks attractive from a long-term perspective, for it has created decent shareholder value for a long time supported by strong sales and healthy cash flow.

Outlook

With sustainable debt and a business model that is resistant to economic uncertainties, Fastenal’s growth prospects look bright. The Winona-based company’s positive financial performance, both on the earnings and sales fronts, can be attributed mainly to the stable demand for its vending devices, especially innovative products like FASTBin.

Going by past performance – the installed-devices base expanded at an impressive rate despite the uncertainties — the vending segment will continue to be the primary growth driver in the near future. Meanwhile, the company’s prudent pricing strategy helped it effectively deal with the high inflation.

Key Numbers

Over the past two years, earnings either beat or matched analysts’ estimates. In the fourth quarter, sales and profit increased year-over-year, reflecting stable demand and favorable pricing. At $0.40 per share, earnings were up 17.6%, while net sales increased 13% annually to $1.53 billion. In the whole of 2021, the company signed 274 onsite locations, taking the total number of active sites to 1,416. Compared to last year, the fourth-quarter e-commerce volume grew by 48%.


GE Q3 2021 Earnings: Key financials and quarterly highlights


When we talk and look at the impacts of COVID-19 and how we think about it on a future basis, we now consider COVID-19 to be merely an ongoing element of our global business environment. And like all the society, we have to learn how to live with it. The first step for us is recognizing it for what it is, it’s a serious virus. But we — but our approach is not one of fear and chaos. It’s an approach of sharing the facts with our customers and our employees, what we’re doing and how we’re handling it day-to-day.

Fastenal’s CEO Daniel Florness

Onsite Push

As part of the ongoing consolidation drive, the management closed more branches last year, mainly in the U.S., as it deepens focus on on-sites and supply chain tools that include the digital platform. Fastenal’s stock has gained 20% in the past twelve months. It made modest gains early Friday after closing the previous session slightly above $58.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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