How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Fastenal (FAST) ten years ago? It may not have been easy to hold on to FAST for all that time, but if you did, how much would your investment be worth today?
Fastenal's Business In-Depth
With that in mind, let's take a look at Fastenal's main business drivers.
Based in Winona, MN, Fastenal Company is a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores, mostly located in North America.
Fastenal derives sales from the fastener product line and the other product line. The fastener product line comprises two kinds of products, threaded fasteners and miscellaneous industrial and construction supplies and hardware. Threaded fasteners include products like bolts, nuts, screws, studs and related washers, while miscellaneous industrial and construction supplies and hardware include various pins and machinery keys, concrete anchors, metal framing systems, wire rope, strut, rivets and related accessories. Threaded fasteners are used in most manufactured products and building projects, and for the maintenance and repair of machines and structures.
The other product line includes tools, cutting tools, material handling, janitorial, electrical, safety and welding supplies and many more.
Fastenal mainly serves customers in the manufacturing and non-residential construction markets. In the manufacturing market, its customers include original equipment manufacturers (OEMs) and maintenance and repair operations (MRO), while in the non-residential construction market, it serves general, electrical, plumbing, sheet metal and road contractors.
Fastenal ended third-quarter 2023 with cash and cash equivalents of $297.5 million, up from $230.1 million at 2022-end. Solid cash flow enabled FAST to lower debt in the quarter. Total debt was $260 million at the end of third-quarter 2023, or 7% of total capital. This compares to $555 million, or 14.9% of total capital, in the year-ago period.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Fastenal ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in October 2013 would be worth $2,541.53, or a 154.15% gain, as of October 16, 2023. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 154.10% and gold's return of 44.75% over the same time frame.
Looking ahead, analysts are expecting more upside for FAST.
Fastenal reported third-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate but net sales missing the same. Both the top and bottom lines increased on a year-over-year basis. The upside was backed by daily sales growth, reasonable expense control and lower net interest expense. Also, growth at Onsite locations, with active sites increasing 13.5% in the reported quarter, added to the uptrend. Moreover, the company’s cost-control initiatives and focus on FAST Solutions bode well. Shares of the company have outperformed its industry in the past year. However, higher occupancy-related expenses and stretched valuation are concerns. Earnings estimates for 2023 have remained unchanged in the past 30 days, limiting the stock's upside potential.Over the past four weeks, shares have rallied 8.87%, and there have been 4 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.