Fastenal Analyst Cuts Estimates After Q3 Results
Shares of North America’s largest fastener distributor, Fastenal Co (NASDAQ:FAST), tanked in early trading on Thursday, despite the company reporting upbeat third-quarter results.
While the company’s September average daily sales were disappointing, EBIT margins were meaningfully better than expected, according to DA Davidson analyst Chris Dankert.
The Fastenal Rating: Dankert reiterated a Neutral rating and price target of $51.
The Fastenal Thesis: The company’s September average daily sales growth of 14.4% year-on-year came in significantly below investor expectations of 17%-18%, Dankert said in the note.
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Fastenal’s September sales rose 1.7% month-on-month, well below the typical seasonal growth of 4.0%, he added.
The analyst noted, however, that September was only the second time the company’s sales grew slower than seasonality so far in 2026.
Fastenal’s gross margin of 44.8% exceeded Street expectations of 44.6%, partly due to favorable timing that kept GM otherwise in line, Dankert said.
He added that the company’s gross margin contracted by 50 basis points (bps) year-on-year due to:
- Ongoing price and cost headwinds
- An increase in unfavorable customer mix
- Rising fuel costs
However, the company’s strong SG&A control resulted in a "material EBIT margin beat," even as Fastenal continued to take market share, albeit at a slightly more modest pace than in the recent past, the analyst noted.
He further highlighted that:
- Operating margin expanded by 90 bps year-on-year to 21.5%, coming in better than consensus of 21.0%
- This was achieved despite lower gross margin and elevated fuel costs
- SG&A as a percent of sales improved 130 bps year-on-year to 23.3% beating the forecast of 23.5%.
- This was driven by "impressive headcount control."
FAST Price Action: Fastenal shares declined 3.55% to $50.16 at the time of publication on Thursday.
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