On Friday, Stifel maintained a Buy rating and an $80.00 price target for Fastenal Company (NASDAQ: NASDAQ:FAST), following the company's reported increase in daily sales for August. The industrial supplies company experienced a 3.0% month-over-month (M/M) and a 2.1% year-over-year (Y/Y) increase in daily sales, which stands in contrast to the previous month's figures, where there was a 5.3% M/M decrease and a 0.5% Y/Y uptick.
The August daily sales growth surpassed the historical average for the month, which has been a 2.7% M/M rise from 2018 to 2023, excluding the outlier year of 2020. Furthermore, the compound annual growth rate (CAGR) for August's daily sales over two years hit 2.9%, an improvement over July's 2.1%.
The improvement was noted across the board, with both national and non-national accounts showing better month-over-month daily sales growth in August compared to July. Stifel's analysis suggests that if Fastenal can sustain the Y/Y daily sales growth of 2.1% for the remainder of the third quarter of 2024, it could potentially lead to a 3.1% Y/Y increase in revenue, reaching approximately $1.904 billion. This figure is slightly below the consensus revenue forecast of $1.918 billion, which anticipates a 3.9% Y/Y growth.
Fastenal's performance in August indicates a positive trend for the company, as it not only beats its historical average for the month but also shows a rebound from the M/M decline observed in July. The company's ability to maintain this momentum through the third quarter could be pivotal in reaching the revenue targets.
In other recent news, Fastenal reported a 2% increase in net sales and a 2% decrease in earnings per share (EPS) for the second quarter, generating $258 million in operating cash. Jeff Watts was announced as the new president and the company also announced a change in its independent registered public accounting firm from KPMG to PricewaterhouseCoopers (PwC). Morgan Stanley initiated coverage on Fastenal with an equalweight rating and a price target set at $72.00, acknowledging the company's potential for a return to normalized growth rates.
Baird has reaffirmed its neutral stance on Fastenal with a steady price target of $67.00, while Loop Capital maintained a hold rating on Fastenal, raising the share price target to $64. Stifel reduced its price target to $80 from $85 but retained its buy rating, forecasting potential mid-single-digit revenue growth for Fastenal.
InvestingPro Insights
According to InvestingPro data, Fastenal Company (NASDAQ: FAST) boasts a market capitalization of $37.33 billion and a P/E ratio of 32.21, reflecting a premium valuation in the market. The company's revenue for the last twelve months as of Q2 2024 is reported at $7.415 billion, with a modest growth of 2.43%. Despite this, analysts have recently revised their earnings expectations downwards for the upcoming period, suggesting a cautious outlook on the company's near-term performance.
InvestingPro Tips also indicate that Fastenal has been trading at a high earnings multiple, which could be a concern for value-oriented investors. However, the company has a history of consistent dividend payments, having maintained them for 32 consecutive years, which may appeal to income-focused shareholders. For a more comprehensive analysis, there are 15 additional InvestingPro Tips available for Fastenal, offering deeper insights into the company's financial health and stock performance.
These metrics and tips should be considered by investors who are following Fastenal's ability to sustain its positive sales trends and are evaluating the company's stock for potential investment. For further details on Fastenal's financial outlook, including additional InvestingPro Tips, visit: https://www.investing.com/pro/FAST.
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