Tags: Fastenal | growth | earnings | FAST

Fastenal Nails Growth on Earnings

By    |   Tuesday, 18 Oct 2011 10:55 AM

Selling threaded fasteners was a core business strategy for Fastental (FAST) back in 1967, when it was founded. Today, the company offers 11 product lines, including office supplies, electrical supplies, and cutting tool blades. Fasteners amounted to 46 percent of Fastenal’s 2010 sales.
Investors like what they see and have rewarded Fastenal with a 14 percent gain so far this year. Meanwhile, rival W.W. Grainger (GWW) notched a 9.7 percent gain.

Fastenal’s secret? Tight cost controls. The Minnesota company regularly racks up over a 20 percent return on equity, despite intense competition. S&P analysts note that Fastenal also has a very well run business model.

The company’s latest goal is to grow its average sales per store from $80,000 up to $110,000 by 2013, along with a pretax margin of 23 percent. Fastenal also keeps adding stores to its footprint. At the end of the second quarter, it sold products in 2,558 stores, mostly in the United States.

This year, Fastenal is firing on all cylinders. Second-quarter net sales rose 22.9 percent to $702 million versus $571 million a year ago. Net earnings skyrocketed 36 percent. There’s no long-term debt. Solid free cash flow can fuel more growth.

Undervalued and growing

Of the 11 analysts followed by Thomson/First Call, three have strong buy recommendations on Fastenal and one has a buy, with seven holds.

S&P analysts placed a strong buy rating on Fastenal, viewing the stock as undervalued. They like the company’s strong focus on growth and its rebounding business in manufacturing and non-residential construction sales. The company reports next on Jan. 18.

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Selling threaded fasteners was a core business strategy for Fastental (FAST) back in 1967, when it was founded. Today, the company offers 11 product lines, including office supplies, electrical supplies, and cutting tool blades. Fasteners amounted to 46 percent of Fastenal...
Fastenal,growth,earnings,FAST
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2011-55-18
Tuesday, 18 Oct 2011 10:55 AM
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