Fastenal Stock Down on Q3 Earnings & Sales Miss, Margins Up Y/Y

Fastenal Company FAST reported lower-than-expected third-quarter 2025 results, wherein earnings per share (EPS) and net sales missed the Zacks Consensus Estimate. However, on a year-over-year basis, both metrics grew.The year-over-year growth in the performance was attributable to improved customer contract signings despite sluggish industrial production activity, alongside favorable foreign exchange rates.Moreover, the benefits realized from the fastener expansion project and other supplier-focused initiatives, accompanied by improvements in customer and supplier incentives, aided the bottom-line growth and margin expansion.FAST stock lost 3.9% in the pre-market trading session on Monday, after the results’ announcement.Fastenal’s Q3 Earnings & Sales in DetailThe company reported EPS of 29 cents, which missed the Zacks Consensus Estimate by 3.3%. In the year-ago quarter, FAST reported an EPS of 26 cents.Net sales totaled $2.13 billion, slightly missing the consensus mark of $2.14 billion by 0.5%, but increasing 11.7% from the year-ago level.Fastenal Company Price, Consensus and EPS Surprise Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company QuoteDaily sales of $33.3 million increased 11.7% year over year in the quarter. Foreign exchange rates positively impacted sales by 10 basis points (bps) against a 10-bps negative impact in the year-ago quarter.Unit sales growth in the quarter was driven by an increase in the number of customer sites spending $10K or more per month with Fastenal and, to a lesser degree, by growth in average monthly sales per customer site across all customer spend categories.Daily sales of Fasteners (mainly used for industrial production and accounting for approximately 31% of net sales) increased 14.4% year over year. Sales of Safety Supplies (22.1%) grew 9.8% daily. Sales of the Other Product Lines (46.9%) also increased 10.7% year over year.On an end-market basis, the daily sales rate of Heavy Manufacturing (which accounted for approximately 43.1% of net sales) rose 12.4% year over year. The daily sales rate of Other Manufacturing (32.8%) grew 12.9% compared with the prior year.Furthermore, the daily sales of Non-Residential Construction grew 7.5% compared with the prior-year quarter, while the same for Other End-Markets grew 8.9% in the same time frame.Daily sales through weighted FMI devices grew 17.7% for the third quarter, representing 45.3% of net sales. Daily sales through eBusiness were up 8%, accounting for 29.1% of total net sales.The company’s sales through Digital Footprint increased to 61.3% of net sales from 61.1% in the year-ago period.Margin Discussion of FASTThe gross margin was 45.3% (up from our projection of 45.1%) in the reported quarter, up 40 bps year over year. This upside was due to improvements in customer and supplier incentives and benefits from the fastener expansion project.Selling, general and administrative expenses – as a percentage of net sales – remained flat year over year at 24.6%. During the quarter, Fastenal witnessed an increase in employee-related and occupancy-related expenses.Operating margin was 20.7% (lower than our projection of 21.5%), up from 20.3% a year ago.FAST’s FinancialsAs of Sept. 30, 2025, Fastenal had cash and cash equivalents of $288.1 million, up from $255.8 million as of Dec. 31, 2024. The long-term debt as of the third quarter was $100 million, down from $125 million as of 2024-end.During the first nine months of 2025, Fastenal returned $751.6 million to its shareholders in the form of dividends.In the first nine months of 2025, net cash provided by operating activities totaled $927.8 million, up from the year-ago period’s reported value of $890.5 million.FAST’s Zacks Rank & Stocks With the Favorable CombinationFastenal currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Here are some companies from the Industrial Products sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.Crane Company CR has an Earnings ESP of +4.93% and a Zacks Rank of 2. Crane Company’s earnings topped the consensus mark in each of the last four quarters, with the average surprise being 7.5%. Earnings for the company’s third quarter of 2025 are expected to grow 5.8% year over year. Hubbell Incorporated HUBB has an Earnings ESP of +0.17% and a Zacks Rank of 2. Hubbell’s earnings topped the consensus mark in three of the last four quarters and missed on the remaining occasion, with the average surprise being 2.3%. Earnings for the company’s third quarter of 2025 are expected to grow 11.4% year over year. Otis Worldwide Corporation OTIS has an Earnings ESP of +0.30% and a Zacks Rank of 3. Otis Worldwide’s earnings topped the consensus mark in two of the last four quarters and missed on the other two occasions, with the average surprise being 0.2%. Earnings for the company’s third quarter of 2025 are expected to increase 4.2% year over year.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>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 Crane Company (CR): Free Stock Analysis Report Hubbell Inc (HUBB): Free Stock Analysis Report Otis Worldwide Corporation (OTIS): 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