Is Fastenal (FAST) Offering Value After Recent Share Price Weakness?

Fastenal (FAST) has seen its stock slide nearly 7% over the past month and fall 20% in the past 3 months, sparking conversations among investors about what might be driving the recent weakness.

See our latest analysis for Fastenal.

After a strong start to the year, Fastenal’s share price momentum has clearly faded, with a 6.5% drop over the past month and a much steeper 20.4% slide in the last three months. While the stock is still up 11.7% year-to-date, its one-year total shareholder return is slightly negative. Over the long term, however, Fastenal’s 64% three-year and 89% five-year total returns show why patient investors have stuck around.

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The recent pullback leaves investors debating whether Fastenal is now undervalued based on its fundamentals, or if the market has already accounted for its future growth prospects. Investors are considering if this is a compelling entry point, or if everything is already priced in.

Most Popular Narrative: 8.9% Undervalued

Fastenal’s most widely followed narrative suggests the fair value sits above the recent close, reflecting expectations for robust expansion in the company’s digital operations and supply chain. The gap between the projected fair value and last close hints at optimism that current market concerns may be overdone.

The company is expanding its Fastenal Managed Inventory (FMI) technology, which currently represents over 43% of revenue. Fastenal aims to enhance revenue growth by increasing efficiency in customer supply chains. The company also seeks to increase its digital footprint to represent 66-68% of sales, up from 61%, potentially boosting revenue by optimizing purchasing and operational efficiency.

Read the complete narrative.

Ever wonder what happens when a distributor transforms into a digital supply chain powerhouse? The entire fair value rests on a high-stakes bet: Fastenal can outgrow industry trends by focusing on inventory technology and digital innovation. Just how aggressive are the underlying forecasts for earnings and margins? The answers inside the full narrative may surprise you.

Result: Fair Value of $43.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing trade tensions and rising supply chain costs remain key risks that could derail Fastenal’s expected growth and put pressure on future margins.

Find out about the key risks to this Fastenal narrative.

Another View: Multiples Suggest a High Valuation

Looking beyond fair value models, Fastenal’s price-to-earnings ratio stands tall at 37.2x, much higher than both its industry average of 19.8x and the peer average of 20.1x. Even compared to its fair ratio of 26.1x, shares look expensive. This raises questions about whether the market is getting ahead of itself, or if a premium is truly warranted. Could this pricing signal strong future growth, or does it leave little room for errors?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Fastenal Narrative

If you see things differently or want to dive into your own research, you can craft a fresh perspective in just a few minutes. Do it your way.

A great starting point for your Fastenal research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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