Fastenal Company

Technical Analysis

FAST exhibits strong positive momentum with impressive short-term returns, outperforming the broader market significantly over the past three months. Trading comfortably above its 52-week low, the stock appears well-positioned for continued gradual appreciation without excessive volatility concerns.

Fundamentals

While revenue and profitability saw mild compression recently, the company maintains excellent financial health with minimal debt and strong liquidity. Operational efficiency could benefit from improved working capital management, but overall, the balance sheet remains robust and low-risk.

Valuation & Peer Comparison

FAST's valuation multiples are notably elevated, signaling significant market optimism priced into its current levels. Compared to typical industrial peers, its P/E and EV/EBITDA ratios suggest expectations of strong future growth, which may pose a risk if not realized.

Risk Assessment

The stock's below-market beta offers a defensive quality, though its historical drawdown highlights vulnerability during broader downturns. With negligible short interest, downside pressure appears limited, yet investors should monitor liquidity conditions and the sustainability of growth assumptions.

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Recommendation

Based on the analysis, FAST is not a buy at current levels. While the company demonstrates solid operational health and positive momentum, its valuation appears stretched relative to both its recent performance and industry norms. Investors may find better entry points after a correction or upon clearer signs of accelerated earnings growth to justify current multiples. For now, a wait-and-see approach is prudent.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, the 12-month outlook for FAST is cautious despite its strong fundamentals. Key catalysts for growth would include a reacceleration of earnings that validates its premium valuation and improved working capital management. The primary risk is its stretched valuation multiples, which leave the stock vulnerable to a correction if growth expectations are not met, especially during a broader market downturn. In the absence of an analyst target, a prudent target price range would likely be contingent on a market pullback or significant earnings beat, suggesting the stock may trade sideways or see moderate downside from the current $45.78 level until its growth prospects become more certain.

Wall Street Consensus

Most Wall Street analysts are optimistic about Fastenal Company's 12-month outlook, with consensus target around $46.21, indicating expected upside potential.

Overall, FAST has investment potential but also faces challenges. Here are key factors to weigh before investing.

FAST has demonstrated strong relative outperformance with significant gains over recent periods.

The stock has delivered robust short-term performance, gaining 4.68% over one month and 11.75% over three months, substantially outperforming the market by 11.51% during the latter period. This consistent upward trajectory indicates positive momentum despite the stock's below-average volatility profile with a beta of 0.885.

Currently trading at $45.78, FAST sits approximately 66% above its 52-week low and about 9.6% below its 52-week high, placing it in the upper range of its yearly spectrum. While not at extreme levels, the stock shows modest room for further upside to reach new highs, particularly considering its manageable historical maximum drawdown of -22.31%.

Revenue & Profitability Revenue declined from $2.13B in Q3 to $2.03B in Q4 2025, reflecting a sequential contraction. Net profit margin compressed from 15.7% to 14.5%, primarily due to a lower gross profit margin of 44.3% compared to 45.3% in the prior quarter, indicating some pressure on pricing or input costs.

Financial Health The company maintains a strong balance sheet with a conservative debt ratio of 8.7% and a minimal debt-to-equity ratio of 0.11. Interest coverage of 427x and a solid current ratio of 4.85 demonstrate ample liquidity and low financial risk.

Operational Efficiency Operational efficiency shows moderate performance with an ROE of 7.5% and asset turnover of 0.40. The 139-day inventory outstanding and lengthy cash conversion cycle of 169 days suggest potential inefficiencies in working capital management.

Valuation Level: FAST appears significantly overvalued based on its current metrics. The TTM and Forward P/E ratios are elevated at approximately 42 and 39, respectively, which is a high valuation level for most companies. This overvaluation is further confirmed by a very high PB ratio of 13.3 and an exceptionally high EV/EBITDA of 120.3, indicating the market is pricing in substantial future growth expectations.

Peer Comparison: Without specific industry average data, a definitive peer comparison cannot be provided. However, given the extremely high valuation multiples presented, it is reasonable to conclude that FAST's valuation sits at the upper end of the spectrum relative to most industrial or distribution peers. The negative PEG ratio, while often a data anomaly, further complicates a growth-adjusted comparison but does not diminish the conclusion of a premium valuation.

Volatility Risk: FAST exhibits below-market volatility with a beta of 0.885, indicating it is slightly less volatile than the broader market. However, the stock experienced a maximum one-year drawdown of -22.31%, which demonstrates a moderate risk of significant capital depreciation during market downturns. This combination suggests a defensive profile that is not immune to substantial pullbacks.

Other Risks: The absence of reported short interest indicates minimal speculative pressure or perceived downside risk from short sellers. This lack of short interest, while generally positive, could also imply reduced market scrutiny of potential fundamental weaknesses. The primary risk in this category likely stems from broader market liquidity conditions affecting trading efficiency.