From Quiver Quantitative:

Hedge funds and asset managers are increasing their holdings in Fastenal (NASDAQ:FAST) based on recent institutional holdings data from Quiver Quantitative. Firms such as Charles Schwab, Geode Capital Management, and Victory Capital Management have all recently added to their FAST positions, with Charles Schwab increasing shares held by 3.16%. Fastenal reported earnings results for the third quarter of FY23, with net sales of $1.845 billion (2.4% YoY increase), gross profit of $847.6 million (2.6% YoY increase), EBIT of $386.7 million (2% YoY increase), and net earnings of $295.5 million (3.8% YoY increase). The company’s growth is driven by the expansion of its Onsite locations and FMI Technology offerings.

This remarkable growth and success makes Fastenal a compelling investment opportunity at a fair valuation. Fastenal operates at a high LTM ROE of 34.2% and a LTM ROIC of 36.9%, showcasing its ability to generate excess returns on capital relative to the weighted average cost of capital. It has sustained growth in operating income and revenue, with EBIT growing at a CAGR of 7.4% since 2013, and revenue growing at a CAGR of 7.7% during the same time frame. While gross margins have fallen over the last ten years due to rising COGS, flat EBIT margins show that this is largely due to external factors such as tariffs on Chinese imports. Despite this, Fastenal’s management is strong and has a solid capital allocation strategy. They have a history of share repurchases and offer cash dividends on common stock, which represented 65.4% of net earnings in FY22. The executive compensation structure aligns shareholder and management interests, making it a compelling investment opportunity. Based on these factors, investors have reason to be bullish on Fastenal.



Read more: The Bull Case for Fastenal (NASDAQ: FAST)