Nasdaq-100® Inside the Index: Fastenal (FAST)
Key Figures
- $8.20B FY2025 Revenue
- ~62% Digital share of sales (H1 2026)
- 39.2% Return on invested capital (FY2025)
- ~37.6× Forward P/E (8/27/2026)
- +14.7% Daily sales growth (Q2 2026, YOY)
VOL 1 • ISSUE 20 • SEPTEMBER 2026
Fastenal sells the screws and gloves factories use daily. It stocks them in vending machines inside the customer's plant.
FAST • Industrials • Index Constituent
This Issue — FAST
Fastenal, a current Nasdaq-100® constituent at ~0.26% index weight, distributes the supplies factories and construction sites consume every day: fasteners, safety gear, tools, cutting and welding products. Its people work out of locations inside customer plants, and it stocks vending machines and bins on the customer's own floor, so the reorder happens where the work happens (per company disclosures). Manufacturing accounts for roughly 72% of its end-market demand, which ties the sales line closely to US factory activity.
Business Model & Revenue Drivers
What Fastenal Actually Sells
The catalog is unglamorous: nuts, bolts and screws first, then safety supplies, tools, janitorial, hydraulics, cutting tools, electrical and welding products. Fasteners are still the largest single line at 30.7% of revenue in the twelve months through Q2 2026 (per company filings).
The product is only half of it. Fastenal manages the customer's inventory on the customer's premises, through vending machines, bin-stock programs and on-site staff, plus calibration and tool repair. Those managed-inventory and web channels reached roughly 62% of sales in H1 2026. Buying supplies stops being a purchasing decision and becomes a refill.
SHARE OF SALES THROUGH MANAGED INVENTORY AND WEB (H1 2026)
MANAGED & WEB ~62%
ALL OTHER ~38%
Competitive Moat
Why This Is Hard to Replicate
A competitor can quote a lower price on a box of bolts. It is harder to take over the vending machines, bins and calibration schedules already running inside a plant, where the supplier holds the stock and the shelf space. National purchasing and distribution give Fastenal supply that smaller distributors typically cannot match on cost (per Bloomberg research).
The programs show up in the growth split. Contract customers, the ones with those on-site arrangements, grew daily sales 19% year over year in July 2026, against 8% for non-contract customers (per company disclosures). Smaller shops that need less inventory management shop on price, and are served through the website rather than a sales visit.
DAILY SALES GROWTH BY CUSTOMER TYPE (JULY 2026, YOY)
CONTRACT +19%
NON-CONTRACT +8%
Operating Strengths
Three Structural Advantages
- 45.0% gross margin (FY2025). A distributor of consumable parts keeping 45 cents of gross profit on the sales dollar, per company filings.
- 20.2% operating margin (FY2025). Held in a 20.0% to 20.8% band every year from FY2020 through FY2025, historically consistent through a soft manufacturing stretch.
- 56% sales to largest customers (H1 2026). Customers spending over $50,000 a month, whose sites grew 16.5% year over year in Q2 2026 (per company disclosures).
Growth Catalysts
More of the Customer's Supply Closet
The managed-inventory programs are the lever. Fastenal expects its digital share of sales to reach 63% to 64% for full-year 2026, and those programs are expected to drive above-market growth through 2026 and 2027 (company guidance and Bloomberg research estimates), even though new signings declined in 2025. Every machine installed is shelf space a competitor has to displace rather than underbid.
- Larger accounts. Growth is coming from contract wins with bigger manufacturers, where national coverage and on-site service are the requirement rather than the price sheet
- Automated distribution. A newly built 298,000 square-foot distribution center in Magna, Utah began operating in September 2025 with automated intake, picking and sortation, which represents potential upside on throughput and cost
- A factory upturn. Management expects double-digit sales growth for full-year 2026, helped by pricing actions and broad-based demand (company guidance)
Historical Context
FY2020 – FY2025 Revenue Trajectory
+45% 5-YEAR REVENUE GROWTH
FY20 $5.65B
FY21 $6.01B
FY22 $6.98B INFLATION CYCLE
FY23 $7.35B
FY24 $7.55B
FY25 $8.20B REACCELERATED
SOURCE FASTENAL FILINGS, BLOOMBERG
Revenue grew in every year from FY2020 through FY2025, compounding at roughly 7.7% a year to $8.20B. The 2022 input-cost cycle and the softer FY2024 stretch, when sales grew 2.7%, both passed through without the operating margin leaving its band. FY2025 sales grew 8.7% and earnings per share rose 9%. Past growth is not a guide to future results.
FREE CASH FLOW (FY2020 → FY2025)
$934M → $1.05B +13%
RETURN ON INVESTED CAPITAL
33.3% → 39.2% +5.9 pts
NET DEBT
$404M → $165M −59%
The supplier's shelf moved inside the factory. The reorder happens where the work happens.
Valuation & Investment Thesis
Priced Above the Industrial Group
Fastenal trades at ~37.6× forward earnings (as of 8/27/2026) against roughly 25× for the broader industrial group (per Bloomberg research). What the price buys is a capital-light distributor that generated $1.05B of free cash flow in FY2025 and paid out $1.00B of dividends, close to all of net income.
At a forward earnings multiple of approximately 37.6×, investors may consider whether future growth in managed-inventory programs supports current valuation levels. Gross margin is expected to contract about 50 basis points to 44.5% in 2026 on customer mix and input costs (company guidance).
Key Risks
What Could Change the Story
- Tariff exposure on steel and steel derivatives, which can pressure both fastener margins and customer demand
- Price versus cost, with pricing lagging cost inflation in recent quarters and roughly a 40 basis point gross margin headwind in Q2 2026
- Mix dilution, since the large contract customers driving growth carry lower gross margins; management expects that pressure to continue into 2027
- Manufacturing cycle sensitivity, with results closely tied to short-cycle US industrial production
- Valuation, since a premium multiple leaves limited room for execution shortfalls (per Bloomberg research)
What This Means For You
The Index Angle, in Plain Terms
In Your Index Fund — If you hold a fund that tracks the Nasdaq-100 Index®, you already own this.
- Index composition follows transparent eligibility criteria, and FAST is a current constituent at ~0.26% index weight: roughly 26 cents of every $100 tracking the Nasdaq-100 sits in Fastenal
- If you have worked in a plant or on a job site, you have probably used the machine on the wall that dispenses gloves, safety glasses and drill bits. Fastenal owns and refills them
- One of the least visible businesses in the index: no consumer brand, no app, just the parts that keep other companies producing
Decoding the Jargon
Two terms doing the heavy lifting in this issue.
- Daily sales rate (sales per business day). Comparing sales per working day strips out calendar differences between periods. Fastenal's was up 14.7% year over year in Q2 2026
- Return on invested capital. The profit a business earns on each dollar of capital put into it. At 39.2% in FY2025, Fastenal needs relatively little capital to add sales, which is what funds the dividend
Bottom Line
Inside the Nasdaq-100®, Fastenal keeps other companies running. Its growth depends on how much of each customer's supply closet it manages.
About the Series
The Nasdaq-100® is a globally recognized index of 100 of the most innovative large cap companies listed on the Nasdaq Stock Market®. The Inside the Index series profiles one constituent each issue, from software to soft drinks and computer chips to potato chips, exploring what makes each business distinctive and the metrics investors should know.
Sources
NASDAQ GLOBAL INDEXES. FASTENAL COMPANY SEC FILINGS VIA SEC EDGAR: FY2025 FORM 10-K, Q2 2026 FORM 10-Q; FASTENAL INVESTOR RELATIONS. REVENUE AND PRODUCT MIX, END-MARKET SPLIT, DIGITAL AND MANAGED-INVENTORY SHARE OF SALES, LARGE-CUSTOMER SALES, DAILY SALES RATES, MARGINS, RETURNS, CASH FLOW, DIVIDENDS, DISTRIBUTION-CENTER DETAIL AND GUIDANCE PER FASTENAL COMPANY DISCLOSURES. INDUSTRY STRUCTURE, SECTOR VALUATION MULTIPLES, BETA AND FORWARD ESTIMATES PER BLOOMBERG RESEARCH AND BLOOMBERG CONSENSUS ESTIMATES. DATA AS OF 8/27/2026.
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