About FASTENAL CO

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The company's fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including pins, machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories.

The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations; and non-residential construction market, which includes general, electrical, plumbing, sheet metal, and road contractors. It also serves farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. The company distributes its products through a network of 3,209 in-market locations and 15 distribution centers. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

FAST operates in the Retail Trade | Retail | headquartered in WINONA, Minnesota | approximately 22,400 employees | led by CEO Daniel L. Florness.

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## Investment Thesis FASTENAL CO (FAST) currently ranks **#11** in our coverage universe of 3,571 U.S.-listed equities, with a composite score of **79.9/100**. This places the stock in our **"Strong Buy"** category based on our proprietary six-factor quantitative model. The bull case rests on three pillars: exceptional profitability (Quality score: 95/100), favorable market dynamics (Momentum: 65/100), and reasonable valuation relative to quality (Value: 71/100). Our model, built on 46 peer-reviewed academic studies, identifies these factor combinations as historically predictive of outperformance. The central question for investors: **Is FAST's quality premium justified by its growth trajectory, or has the market already priced in perfection?** --- ## Company Overview FASTENAL CO operates in the **Consumer Discretionary** sector and has demonstrated solid revenue growth of 11.7% over the trailing twelve months. The company converts 15.7% of revenue into net income, a healthy margin profile. At $56.3B, FAST is a large-cap stock with established market position and diversified revenue streams. --- ## Our Six-Factor Analysis Our proprietary model evaluates every stock across six factors, each backed by peer-reviewed academic research. Here's how FAST scores: ### Quality Score: 95/100 ★★★★★ **What we measure:** Return on equity, return on assets, gross margin, net margin, earnings consistency, and accruals quality. FAST generates a return on equity of **33.6%**, exceptional by any standard and indicative of a highly efficient capital structure. Gross margin of **45.3%** reflects competitive industry dynamics. Net margin of **15.7%** is healthy and provides cushion for operational headwinds. **Academic evidence:** Research by Novy-Marx (2013) demonstrates that quality stocks outperform by 4-6% annually over long periods, even after controlling for market beta. --- ### Value Score: 71/100 ★★★★ **What we measure:** P/E, P/B, P/S, EV/EBITDA, and free cash flow yield relative to sector and historical norms. FAST trades at **45.88x earnings**, a rich valuation priced for significant future growth. Price-to-book of **14.45x** reflects significant intangible value and growth expectations. **Academic evidence:** Fama and French (1992) established that value stocks (low P/B, P/E) outperform growth stocks by 3-5% annually, though this premium has compressed in recent years. --- ### Momentum Score: 65/100 ★★★★ **What we measure:** 12-month price momentum, revenue growth acceleration, earnings surprise frequency, and relative strength. Revenue growth of **11.7%** shows solid business momentum. Our timing model assigns a score of **56.18759986684421/100** with a **Favorable** signal, suggesting neutral timing. **Academic evidence:** Jegadeesh and Titman (1993) documented that stocks with strong 6-12 month momentum continue to outperform over the subsequent 3-12 months, generating 1%+ monthly alpha. --- ### Investment Score: 78/100 ★★★★ **What we measure:** Asset growth, capital expenditure intensity, acquisition activity, and capital allocation discipline. An investment score of 78/100 suggests FAST is deploying capital effectively to drive future growth. **Academic evidence:** Titman, Wei, and Xie (2004) found that companies with high asset growth subsequently underperform, suggesting capital discipline matters. --- ### Stability Score: 83/100 ★★★★★ **What we measure:** Beta, earnings volatility, balance sheet strength, debt levels, and cash flow consistency. Beta of **0.77** indicates lower volatility than the market. Debt-to-equity of **0.1%** reflects a conservative capital structure with ample financial flexibility. **Academic evidence:** Low-volatility stocks have historically outperformed high-volatility stocks on a risk-adjusted basis—a phenomenon known as the "low-volatility anomaly" (Baker, Bradley, Wurgler 2011). --- ### Short Interest Score: 10/100 ★★ **What we measure:** Days to cover, short interest as percentage of float, and short interest trend. A short interest score of 10/100 suggests significant bearish positioning, which could indicate either smart money concerns or potential short squeeze opportunity. --- ## Economic Moat Assessment Based on our analysis of profitability metrics, competitive positioning, and sustainability of returns, we assess FAST's economic moat as follows:

Moat Type	Switching Costs
Moat Width	Narrow
Uncertainty	Low

- Exceptional profitability metrics suggest pricing power - Revenue stability indicates potential switching costs --- ## Fair Value Estimate We employ a reverse discounted cash flow methodology to estimate fair value, working backward from the current price to determine what growth assumptions are implied. ### Three-Scenario Analysis

Scenario	Implied Fair Value	Upside/Downside	Assumptions
Bear	$18.4B	-67.3%	Assumes 8% 5-year growth, 18x terminal P/E, 12% discount rate
Base	$33.6B	-40.4%	Assumes 12% 5-year growth, 25x terminal P/E, 10% discount rate
Bull	$58.4B	+3.7%	Assumes 18% 5-year growth, 32x terminal P/E, 9% discount rate

### Probability-Weighted Expected Return Assuming 20% bear, 50% base, and 30% bull probability weights: **Expected Return: -32.5%** --- ## Peer Comparison How does FAST stack up against sector peers?

Company	BCR Score	P/E	ROE	Net Margin
FAST (This Stock)	79.9	45.88	33.6%	15.7%
YUM	80.8	29.42	-25.0%	20.1%
TJX	80.6	30.38	63.5%	9.5%
BYD	79.9	3.70	82.4%	1.4%
HAS	79.6	N/A	91.0%	16.9%
MCRI	79.5	23.39	22.0%	22.1%

FAST's score is competitive with sector peers. --- ## Risk Factors Every investment carries risk. Here are the key risks for FAST: ### Valuation Risk ⚠️ HIGH At 45.88x earnings, FAST is priced for significant future growth. Any deceleration in revenue or margin compression could result in multiple contraction and substantial capital loss. ### Competitive Risk ⚡ MODERATE Competitive dynamics in this sector require ongoing investment and strategic adaptation. ### Execution Risk ⚡ MODERATE The company has demonstrated reasonable operational stability. ### Macro Risk ⚡ MODERATE All equities are subject to macroeconomic conditions including interest rates, inflation, and economic growth. A recession could impact earnings regardless of company-specific quality. --- ## Financial Deep Dive ### Income Statement Analysis **Gross Margin: 45.3%** — Healthy margins typical of established businesses. **Operating Margin: 20.7%** — Solid operational performance. **Net Margin: 15.7%** — Healthy bottom-line performance. ### Balance Sheet Analysis **Debt-to-Equity: 0.1%** — Conservative leverage with ample financial flexibility. **Return on Equity: 33.6%** — Exceptional capital efficiency—top decile performance. ### Cash Flow Indicators **Revenue Growth: 11.7%** — Steady growth reflecting mature market position. --- ## Investment Decision Framework ### Who Should Buy FAST? ✅ **Long-term investors** seeking quality exposure ✅ **Factor investors** targeting quality and momentum ✅ **Portfolio builders** needing Consumer Discretionary sector exposure ### Who Should Avoid FAST? ❌ **Deep value investors** seeking bargain prices ❌ **Short-term traders** seeking high volatility ❌ **Risk-averse investors** concerned about valuation risk ### Position Sizing Recommendation Based on our factor profile and risk assessment: | Portfolio Size | Suggested FAST Weight | |----------------|---------------------------| | $10,000 | $800 - $1,200 | | $100,000 | $8,000 - $12,000 | | $1,000,000 | $80,000 - $120,000 | --- ## The Bottom Line FASTENAL CO represents **a compelling investment opportunity** based on our six-factor quantitative analysis. The company's quality metrics are exceptional, while its valuation offers attractive entry point. Our fair value analysis suggests **downside risk of 40%** under base-case assumptions, with probability-weighted expected returns of **-33%**. We recommend accumulation, particularly on any pullbacks that improve the risk-reward profile. ---

--- ## Methodology Disclosure This analysis is based on the Blank Capital Research six-factor quantitative model, which evaluates securities across Quality, Value, Momentum, Investment, Stability, and Short Interest factors. Factor weights are derived from 46 peer-reviewed academic studies and calibrated to current market conditions. Our fair value estimates employ reverse discounted cash flow analysis, working backward from market price to implied growth assumptions. This methodology is inherently uncertain and should be considered as one input among many in investment decisions. --- *This report was generated on Monday, February 16, 2026. The analysis reflects data as of that date. Past performance does not guarantee future results. This is not investment advice. Blank Capital Research may hold positions in securities mentioned.*