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Here's Why Fastenal (FAST) Is an Attractive Pick Right Now
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Fastenal Company’s (FAST - Free Report) shares have gained more than 16% in the last six months, outperforming the 7.6% growth of its industry. The company’s aggressive investment to increase Onsite locations, vending machines count and ecommerce business is expected to drive growth. Also, the Mansco acquisition is an added positive.
Meanwhile, the Zacks Consensus Estimate for earnings for both the first quarter and current year has increased 1.7% and 0.8%, respectively, in the last 30 days, thus reflecting optimism in the stock’s prospects, and substantiating its Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What Makes Fastenal a Solid Pick?
FAST Solutions Is Revolutionary: Fastenal’s industrial vending process has the potential to revolutionize the industrial distribution system and boost profits. Industrial vending is one of the primary growth drivers for Fastenal that has the potential to drive sales and profits.
Sales through vending machines grew at or near a double-digit pace in each of the four quarters of 2017. Fastenal signed 19,355 vending machines in 2017, reflecting an increase of 7.2% from the prior-year quarter, which is the highest since 2013.
At the end of 2017, the company had more than 71,000 installed vending machines, 14% higher than the 2016 level. The company also saw higher revenue per machine of 2-3% in 2017. Fastenal targets to sign 21,000-23,000 vending devices in 2018.
Mansco Acquisition: Fastenal acquired certain assets of industrial and fastener supply distributor, Manufacturer's Supply Company (Mansco), in March 2017. This marks Fastenal’s largest acquisition till date. Headquartered in Hudsonville, MI, Mansco has additional facilities in Alabama and Texas.
The company focuses on fastener products, with a particularly strong market position with commercial furniture OEMs (Original Equipment Manufacturers). As such, this acquisition establishes Fastenal’s presence in a market where it has not meaningfully contributed in the past, while providing Mansco with additional tools. Mansco generated approximately $50 million of revenues in 2016. Mansco contributed 140 basis points to daily sales growth of 14.8% in the fourth quarter of 2017.
Solid Estimated EPS Growth: The company’s first-quarter earnings are expected to increase 32.6% year over year. The company’s EPS is expected to grow 30.6% for the current year, in line with the industry’s average projected growth.
In 2019, Fastenal is expected to come up with a decent performance as well, wherein its bottom line is expected to grow 8.8%.
Meanwhile, the company’s sales are expected to increase 12.7% in the current quarter and 10.3% for the current year. For 2019, the company’s projected sales growth is a healthy 7.7%.
The above-mentioned tailwinds have made it a great pick in terms of Growth investment. The stock has a Growth Score of A.
Solid VGM Score and ROE: The company has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2, make solid investment choices.
Fastenal’s trailing 12-month return on equity (ROE) supports its growth potential. ROE in the trailing 12 months is 27.4%, while the industry gained 11.9%, reflecting the company’s efficient usage of shareholders’ funds.
Builders FirstSource and Dillard's, both sporting a Zacks Rank #1, are likely to witness 41.7% and 21.3% earnings growth this year, respectively.
Beacon Roofing, carrying a Zacks Rank #2, is expected to witness 63.3% growth in 2018 earnings.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Here's Why Fastenal (FAST) Is an Attractive Pick Right Now
Fastenal Company’s (FAST - Free Report) shares have gained more than 16% in the last six months, outperforming the 7.6% growth of its industry. The company’s aggressive investment to increase Onsite locations, vending machines count and ecommerce business is expected to drive growth. Also, the Mansco acquisition is an added positive.
Meanwhile, the Zacks Consensus Estimate for earnings for both the first quarter and current year has increased 1.7% and 0.8%, respectively, in the last 30 days, thus reflecting optimism in the stock’s prospects, and substantiating its Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What Makes Fastenal a Solid Pick?
FAST Solutions Is Revolutionary: Fastenal’s industrial vending process has the potential to revolutionize the industrial distribution system and boost profits. Industrial vending is one of the primary growth drivers for Fastenal that has the potential to drive sales and profits.
Sales through vending machines grew at or near a double-digit pace in each of the four quarters of 2017. Fastenal signed 19,355 vending machines in 2017, reflecting an increase of 7.2% from the prior-year quarter, which is the highest since 2013.
At the end of 2017, the company had more than 71,000 installed vending machines, 14% higher than the 2016 level. The company also saw higher revenue per machine of 2-3% in 2017. Fastenal targets to sign 21,000-23,000 vending devices in 2018.
Mansco Acquisition: Fastenal acquired certain assets of industrial and fastener supply distributor, Manufacturer's Supply Company (Mansco), in March 2017. This marks Fastenal’s largest acquisition till date. Headquartered in Hudsonville, MI, Mansco has additional facilities in Alabama and Texas.
The company focuses on fastener products, with a particularly strong market position with commercial furniture OEMs (Original Equipment Manufacturers). As such, this acquisition establishes Fastenal’s presence in a market where it has not meaningfully contributed in the past, while providing Mansco with additional tools. Mansco generated approximately $50 million of revenues in 2016. Mansco contributed 140 basis points to daily sales growth of 14.8% in the fourth quarter of 2017.
Solid Estimated EPS Growth: The company’s first-quarter earnings are expected to increase 32.6% year over year. The company’s EPS is expected to grow 30.6% for the current year, in line with the industry’s average projected growth.
In 2019, Fastenal is expected to come up with a decent performance as well, wherein its bottom line is expected to grow 8.8%.
Meanwhile, the company’s sales are expected to increase 12.7% in the current quarter and 10.3% for the current year. For 2019, the company’s projected sales growth is a healthy 7.7%.
The above-mentioned tailwinds have made it a great pick in terms of Growth investment. The stock has a Growth Score of A.
Solid VGM Score and ROE: The company has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2, make solid investment choices.
Fastenal’s trailing 12-month return on equity (ROE) supports its growth potential. ROE in the trailing 12 months is 27.4%, while the industry gained 11.9%, reflecting the company’s efficient usage of shareholders’ funds.
Other Key Picks
Other top-ranked stocks in the same sector are Builders FirstSource, Inc. (BLDR - Free Report) , Dillard's, Inc. (DDS - Free Report) and Beacon Roofing Supply, Inc. (BECN - Free Report) .
Builders FirstSource and Dillard's, both sporting a Zacks Rank #1, are likely to witness 41.7% and 21.3% earnings growth this year, respectively.
Beacon Roofing, carrying a Zacks Rank #2, is expected to witness 63.3% growth in 2018 earnings.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>