Fastenal Posts Solid Q3 Results; Shares Rise 3%

Fastenal Company (FAST) delivered strong third-quarter results for the period ending September 30, 2021. During the quarter, the company experienced strong growth in underlying demand for manufacturing and construction equipment, which aided unit sales and led to a significant increase in net sales. FAST shares rose 3.06% to close at $53.83 on Tuesday.

Fastenal is a U.S. company that specializes in the wholesale distribution of industrial and construction supplies. It offers fasteners and related industrial and construction supplies.

Net sales in the quarter increased 10% year-over-year to $1.55 billion, exceeding consensus estimates of $1.54 billion. Sales could have been much higher had the company not experienced slow growth in certain products to certain end markets affected by COVID-19.

Fastenal’s e-commerce segment registered solid growth as daily sales increased 44.1% in the first nine months of 2021 and 43.4% in the third quarter. E-commerce revenue accounted for 13.9% of total revenue in the quarter. (See Top Smart Score Stocks on TipRanks)

Additionally, net earnings increased 9.9% year-over-year to $243.5 million. Moreover, diluted EPS in Q3 surged 9.7% compared to the same quarter last year to $0.42, in line with consensus estimates.

During the quarter, Fastenal continued to experience pressure related to material and transportation cost inflation. The company has taken necessary pricing actions to mitigate the impact of marketplace inflation.

For the first nine months of the year, Fastenal returned $482.6 million to shareholders through dividends, compared to $482.2 million for the same period last year, including $430.2 million as dividends and stock repurchases worth $52 million.

Recently, Wells Fargo analyst Michael McGinn downgraded Fastenal to Sell from Hold and decreased the price target to $45 from $50, implying 16.40% downside potential to current levels.

Consensus among analysts is a Hold based on 2 Buys, 2 Holds, and 3 Sells. The average Fastenal price target of $53.83 implies that shares are fully valued at current levels.