Is Fastenal (FAST) Fairly Valued As Growth Holds Up But Shares Pull Back?

Fastenal (FAST) has trailed the broader market over the past year, even as revenue expanded 8.3% and net income grew 9.2% to US$8.7b and US$1.4b respectively. This has prompted fresh attention on the stock.

Fastenal’s share price has slipped 6.4% over the past month but remains up 21.2% year to date, while the 1-year total shareholder return of 5.8% contrasts with a very strong 3-year total shareholder return of 92.1%. This suggests that longer term momentum has been stronger than the recent pullback.

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The question now is simple. After Fastenal’s strong multi year run and recent pause, does the current valuation still offer a favourable trade off between downside risk and upside potential for new buyers?

Most Popular Narrative: 2.8% Overvalued

Fastenal last closed at $49.01, which sits modestly above the most followed fair value estimate of $47.68 that uses an 8.07% discount rate.

The analysts have a consensus price target of $47.68 for Fastenal based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $55.0 and the most bearish reporting a price target of just $39.9.

Read the complete narrative. Read the complete narrative.

Want to understand why this valuation leans rich despite healthy growth assumptions. The narrative leans heavily on steady earnings expansion and firm margins, then layers on a premium future profit multiple. Curious which specific revenue and margin paths need to hold for that outlook to add up.

Result: Fair Value of $47.68 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, trade disputes that raise input costs and pressure margins, along with softer demand that leaves recent pricing actions short, could quickly challenge this Fastenal narrative.

Find out about the key risks to this Fastenal narrative.

Next Steps

Mixed messages in the Fastenal story. Use the data, weigh both the worry list and the upside case, then dig into the 2 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Fastenal?

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• Unearth potential future leaders before they are widely followed with the 18 high quality undiscovered gems.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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