Does Fastenal’s 51% Rally Signal More Momentum Ahead in 2025?

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If you have been watching Fastenal lately and wondering whether now is the time to buy, hold, or take some profits, you are definitely not alone. The company’s stock has been on a tear recently, rising roughly 24% in the past three months and delivering over 51% in total returns over the past year. That is some serious momentum, fueled by both solid revenue and net income growth. These have consistently come in above 7% and 9% annually, respectively.

This surge in Fastenal’s share price comes on the back of robust demand for industrial products and a broader market rally in capital goods. Some investors are betting that the boom can last, while others may be a little wary, especially as the stock now trades at a noticeable premium to its analyst price target of $44.05. In fact, the most common valuation methods do not leave much room for undervaluation; Fastenal scores a 0 out of 6 on our valuation checklist, meaning it is considered undervalued in exactly zero categories.

Does that mean Fastenal is all tapped out after its recent climb, or could there be hidden value the main models are missing? In the next section, I will break down how Fastenal stacks up across the classic valuation checks and share why there may be a smarter way to think about the company’s true worth before you make your next move.

Fastenal delivered 51.1% returns over the last year. See how this stacks up to the rest of the Trade Distributors industry.

Approach 1: Fastenal Cash Flows

A Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its future cash flows and discounting them back to today’s dollars. This method helps investors see what a business might genuinely be worth, regardless of its current market hype.

Fastenal currently generates around $907 million in free cash flow (FCF) each year. Projections based on analyst estimates and historical growth suggest annual FCFs could reach about $1.42 billion by 2029. The ten-year forecast steadily increases, reflecting the business’s consistent performance, with analyst sources and conservative growth rates guiding the numbers throughout the decade.

Based on these cash flow projections, the DCF model calculates Fastenal’s estimated intrinsic value at approximately $25.06 per share. This is substantially lower than the company’s present share price, resulting in a steep discount of 101.1 percent. This indicates the stock is significantly overvalued by this method.

Result: OVERVALUED

Our DCF analysis suggests Fastenal may be overvalued by 101.1%. Find undervalued stocks based on DCF analysis or create your own screener to find better value opportunities.

Approach 2: Fastenal Price vs Earnings

For profitable companies like Fastenal, the price-to-earnings (PE) ratio is a go-to method for valuing the stock. The PE ratio helps investors gauge what they are paying today for each dollar of earnings. Generally, companies with higher expected growth rates, better profit margins, or lower risks can justify higher PE ratios. In contrast, more mature or riskier businesses tend to trade at lower multiples.

Currently, Fastenal trades at a PE ratio of 48.6x, significantly higher than both the industry average of 23.4x and the average of its listed peers at 21.7x. On the surface, this suggests a substantial premium, likely reflecting Fastenal’s strong track record and positive market sentiment.

To get a more tailored sense of value, Simply Wall St calculates a proprietary “Fair Ratio,” which adjusts for company-specific factors like growth, profitability, and risk. For Fastenal, the Fair Ratio comes in at 26.4x. Comparing this to the current PE ratio confirms that the stock is priced well above where you would expect given its fundamentals. By this measure, Fastenal appears to be quite expensive at today’s levels.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Fastenal Narrative

Rather than relying solely on traditional metrics, many investors now use “Narratives” to guide their stock decisions. A Narrative is essentially your own investment story for a company like Fastenal. It links what you know or believe about the business to your estimates for future revenue, earnings, and margins, then turns these assumptions into a fair value that makes sense for your outlook.

Narratives bridge the gap between a company’s story and the numbers, helping you see exactly how your perspective translates into a buy or sell decision. Within Simply Wall St’s platform and community, creating and comparing Narratives is an easy, accessible way to understand a stock’s potential as new information, such as news or earnings releases, automatically updates your forecast and fair value.

This approach lets you see whether your own fair value is above or below the current price, empowering you to act confidently in line with your convictions. For Fastenal, for example, some investors’ Narratives lead to a bullish price target of $49.00 based on aggressive earnings expectations, while others land on a more cautious $29.50, reflecting different assumptions about risks and growth. With Narratives, investment decisions can be as dynamic and personal as your view of the company itself.

Do you think there's more to the story for Fastenal? Create your own Narrative to let the Community know!

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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