FAST

We rate FASTENAL CO (FAST) as a Hold with a composite score of 51.6/100 at a current price of $45.40. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (72th percentile) and stability (57th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (27th percentile) and momentum (37th percentile) tempers our overall conviction. We assign a Wide Moat rating (70/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

FASTENAL CO holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 51.6/100 places it at rank #1770 in our full 7,333-stock universe. With a $56.3B market capitalization, FASTENAL CO operates at meaningful scale within the Retail Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 11%, though momentum at the 37th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 45% (+9.0pp vs sector) narrow to operating margins of 21% (+16.6pp vs sector) and net margins of 15.6%, yielding a gross-to-net conversion rate of 35%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $45.40, FASTENAL CO is trading near fair value based on current fundamentals. Our value factor score of 43/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 42.0x (a 96% premium to the sector median of 21.4x), EV/EBITDA of 32.0x (at a premium), P/B of 13.5x, P/S of 6.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to FASTENAL CO. The company exhibits strong financial stability with a beta of 0.64, conservative leverage (3% D/E), and a stability factor in the 57th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.64 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 42.0x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 57th percentile and quality factor at the 72th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 45% provide a buffer against cost pressures; conservative leverage (3% D/E) limits balance sheet risk; large-cap scale ($56.3B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate FASTENAL CO's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 32.0%, disciplined leverage (3% D/E), a 1.73% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — FASTENAL CO meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 1.73% dividend yield, and the combination of 25.0% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, FASTENAL CO receives a Hold rating with a composite score of 51.6/100 (rank #1770 of 7,333). Our quantitative framework assigns a Wide Moat (70/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 47/100.

Our analysis supports a neutral stance on FASTENAL CO. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.