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Fastenal Company (NASDAQ: FAST ), a leading manufacturer of screw-like fasteners and other hardware, is steadily expanding into non-U.S. markets. In the last decade, the company’s international revenue has more than tripled and will surpass the $1 billion mark for the first time in 2022.
Savings
While a widespread stock selloff ravaged the market, Fastenal was not spared. Shares of the Winona-headquartered industrial supplies provider are down from their peak and have lost about 16% in 2022. However, it has outperformed the broad market even as the company remains unaffected by market challenges.
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Fastenal belongs to the Industrial Machinery & Equipment industry and has a market cap of around $28 billion. Manufacturing and machinery businesses are slowly recovering from the pandemic, and the trend will accelerate as the post-pandemic market reopens. Given the favorable demand conditions, the company maintains stable sales during periods of crisis and usually produces earnings that are greater than expected.
Hold It?
Investor questions will ask whether the positive factors translate into an increase in shareholder value. The stock is unlikely to generate significant gains this year as most likely tailwinds have been accounted for. investors should wait for a better entry point.
That said, as part of a growing industry, Fastenal’s future prospects are good. An impressive dividend yield of around 3% adds to the stock’s appeal as a reliable long-term investment. Recently, demand for capital goods and industrial commodities has been fairly stable, which has more than offset the softness in the consumer goods market and slower growth in construction.
Finance
Fastenal ended fiscal 2022 on a slightly positive note, reporting higher revenue and profit for the fourth quarter. Earnings rose 7% from last year to $0.43 per share on revenue of $1.70 billion, which was up 11% year over year reflecting higher unit sales. Operating cash flow more than doubled to about $300 million.
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However, in a sign of underlying softness, daily sales growth and on-site sign-up rates declined for the third consecutive quarter, dampening investor sentiment somewhat. In addition, gross margin decreased to 45.3% from 46.5% last year primarily due to lower profits realized from sales to on-site customers, national account customers, and unfavorable price-cost balance.
Shares declined in early trading on Friday, despite the company reporting better-than-expected results for the fourth quarter. It has had a volatile start to 2023 and has lost about 3% so far.
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