Is It Too Late To Consider Buying Fastenal Company (NASDAQ:FAST)?

September 04, 2022
  •  Updated
November 13, 2022
NasdaqGS:FAST
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Let's talk about the popular Fastenal Company (NASDAQ:FAST). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$56.11 at one point, and dropping to the lows of US$46.77. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fastenal's current trading price of US$50.47 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Fastenal’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Fastenal

What Is Fastenal Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.65% above my intrinsic value, which means if you buy Fastenal today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $49.65, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Fastenal’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Fastenal?

earnings-and-revenue-growth
NasdaqGS:FAST Earnings and Revenue Growth September 4th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 27% over the next couple of years, the future seems bright for Fastenal. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in FAST’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on FAST, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Fastenal and we think they deserve your attention.

If you are no longer interested in Fastenal, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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