Back to top

Image: Bigstock

Fastenal Acquires Apex Assets, Fortifies Industrial Vending

Read MoreHide Full Article

Fastenal Company (FAST - Free Report) has been focusing on the industrial vending process that has the potential to revolutionize the industrial distribution system and increase profitability. Recently, the company announced that it has purchased certain assets of Apex Industrial Technologies LLC (“Apex”). However, the terms of the deal have been kept under wraps.

Since 2008, both Fastenal and Apex have worked together in developing more than 105,000 product dispensing and leased devices across 23 device types in 25 countries. Apex has created and developed the software, designed the equipment, as well as built the vending equipment supply chain. Conversely, Fastenal has provided the technology with industry expertise and a marketplace. Notably, this leading solution in the industrial and commercial marketplace generated sales of more than $1.1 billion in 2019.

In addition to certain assets, Fastenal also bought a perpetual and unfettered use of key patents, designs, software and licenses, along with a direct access to the supply chain.

Notably, Fastenal adopted FAST Solutions to revolutionize the industrial distribution system and increase profitability with the automated dispensing technology. Sales through vending machines grew strongly in both 2017 and 2018. Moreover, in 2019, the same grew at a double-digit pace, primarily due to higher installed base.

At 2019-end, the company operated 89,937 vending machines, up 10.8% from the prior year. In 2020, it projects to sign 22,000-24,000 vending devices, suggesting an improvement from 21,857 signed in 2019.

Shares of the company have gained 0.9% in the past six months against the industry’s 13.8% fall. Fastenal’s aggressive investment to boost onsite locations, vending machines count and the e-commerce business is driving growth.

However, slower demand in end-markets served and for lower-margin non-fastener products has been the primary cause of concern for Fastenal over the last few quarters. Also, the recent economic slowdown resulting from shutdowns due to coronavirus has raised concerns regarding the future. The Zacks Consensus Estimate for the company’s first-quarter 2020 earnings — scheduled to be released on Apr 14 — is pegged at 32 cents, indicating 5.9% year-over-year decline.

Zacks Rank & Stocks to Consider

Fastenal — which shares space with Beacon Roofing Supply, Inc. (BECN - Free Report) in the same industry — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Two better-ranked players with solid near-term prospects in the same space are Lumber Liquidators Holdings, Inc. (LL - Free Report) and BMC Stock Holdings, Inc. (BMCH - Free Report) .

Lumber Liquidators and BMC’s EPS growth rate is projected at 32.8% and 9%, respectively, for 2020.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>