Fastenal Q4 Earnings & Sales Meet Expectations, Stock Down

Fastenal Company FAST reported fourth-quarter 2025 results that came in line with the Zacks Consensus Estimate for both earnings and revenues, supported by steady contract customer momentum and improved operating leverage. Still, margin pressures and cautious investor sentiment weighed on the stock, with shares down 5.4% in pre-market trading on Tuesday following the announcement.FAST’s Q4 Revenues & Earnings PerformanceFastenal reported earnings per share (EPS) of 26 cents, in line with the Zacks Consensus Estimate, but up 12.2% year over year from 23 cents in the prior-year quarter. Net income increased to $294.1 million from $262.1 million a year ago.Quarterly net sales came in at $2.03 billion, meeting the Zacks Consensus Estimate but climbing 11.1% year over year. Average daily sales rose 11.1% year over year to $32.2 million, driven by higher unit volumes, continued growth in customer sites spending more than $10,000 per month, and a favorable pricing contribution of roughly 310–340 basis points (bps). Foreign exchange added about 20 bps to sales growth during the quarter.Fastenal Company Price, Consensus and EPS Surprise Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company QuoteMargin Trends: Mixed but StableGross profit totaled $898.7 million, up 9.8% year over year, while gross margin declined 50 bps to 44.3%. The contraction reflected timing-related cost of goods sold, lower supplier rebate timing, and a slight price-cost headwind. These pressures were partially offset by benefits from the fastener expansion project and supplier-focused initiatives.Selling, general and administrative expenses improved to 25.4% of sales from 25.9% a year ago. As a result, operating profit rose to $384.3 million, with operating margin expanding modestly to 19% from 18.9% last year.Segment & Customer HighlightsDuring the fourth quarter of 2025, Fastenal reported broad-based growth across product categories, supported by strength in manufacturing customers and benefits from the fastener expansion project. Direct products, which include fasteners, cutting tools and other production-related items, recorded daily sales growth of 13.1% year over year and accounted for 38.4% of net sales, up from 37.8% in the year-ago quarter. Growth was led by direct fasteners and hardware, which rose 12.1% year over year and represented 20.4% of sales. Indirect products, comprising safety supplies and other MRO-related items, posted daily sales growth of 10.1% and made up 61.6% of net sales, slightly lower than last year.From an end-market perspective, manufacturing remained the primary growth driver. The daily sales rate of heavy manufacturing increased 12.6% year over year, accounting for 42.9% of total sales, while other manufacturing grew 13.0%, representing 32.5% of sales. Combined manufacturing end markets contributed 75.4% of net sales, up from 74.3% a year ago. Non-residential construction daily sales rose 9.9% year over year, while other end markets grew 4.6%, reflecting continued softness among reseller customers partially offset by strength in transportation and data center demand.Fastenal’s digital channels continued to gain scale in the quarter. Sales through FMI technology increased 16.6% year over year, representing 46.1% of net sales, driven by higher FASTBin and FASTVend activity and ongoing customer migrations to digital stocking solutions. eBusiness sales grew 6.3% year over year, accounting for 29.6% of total sales. Overall, Digital Footprint sales rose to 62.1% of net sales, remaining relatively stable compared with the year-ago period and underscoring the company’s continued shift toward technology-enabled distribution.2025 HighlightsIn 2025, Fastenal delivered steady revenue and earnings growth despite a sluggish industrial environment. Net sales rose 8.7% year over year to $8.20 billion, supported by higher unit volumes, pricing actions and continued strength in contract customers, with average daily sales up 9.1%.On the bottom line, EPS increased 9.2% to $1.09, reflecting operating leverage and cost discipline. Gross margin slipped slightly to 45.0%, while operating margin improved to 20.2% on better SG&A leverage. Overall, results underscore Fastenal’s ability to drive earnings growth and sustain healthy margins while expanding its digital and FMI platforms.Balance Sheet & Capital AllocationFastenal ended 2025 with $276.8 million in cash and cash equivalents versus $255.8 million at 2024-end. Long-term debt stood at $100 million, down from $125 million a year earlier, reflecting continued balance-sheet discipline. Total liquidity remained solid, supported by strong operating cash flow of $368.1 million in the quarter (up from $282.8 million a year ago) and $1.3 billion (up from $1.2 billion in 2024).The company returned $252.6 million to shareholders via dividends during the quarter. No share repurchases were made in 2025.FAST’s Outlook & CommentaryManagement reiterated confidence in long-term growth drivers, including contract customer wins, FMI adoption, and digital expansion. For 2026, Fastenal expects higher capital spending to support distribution capacity, technology investments, and logistics efficiency, while continuing to navigate a sluggish industrial production backdrop.FAST’s Zacks RankFastenal currently carries a Zacks Rank #3 (Hold).Key PicksSome better-ranked stocks from the Industrial Products sector are Core & Main, Inc. CNM, Kennametal Inc. KMT and Alcoa Corporation AA.Core & Main currently sports a Zacks Rank #1 (Strong Buy). The company’s revenues and EPS are expected to grow 3% and 8.8% for fiscal 2026, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.Kennametal currently carries a Zacks Rank #1. The company’s revenues and EPS are expected to grow 5.6% and 19.4% for fiscal 2026, respectively.Alcoa currently carries a Zacks Rank #1. The company’s revenues and EPS are expected to grow 8.5% and 36.2% for 2026, respectively.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fastenal Company (FAST): Free Stock Analysis Report Alcoa (AA): Free Stock Analysis Report Kennametal Inc. (KMT): Free Stock Analysis Report Core & Main, Inc. (CNM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks