Fastenal Company (FAST) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Fastenal Company ( FAST) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Fastenal Company as such a stock due to the following factors:

  • FAST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.8 million.
  • FAST has traded 2.8 million shares today.
  • FAST is down 4% today.
  • FAST was up 5.1% yesterday.

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More details on FAST:

Fastenal Company, together with its subsidiaries, operates as a wholesaler and retailer of industrial and construction supplies in the United States, Canada, and internationally. The company offers fasteners and other industrial and construction supplies under the Fastenal name. The stock currently has a dividend yield of 2%. FAST has a PE ratio of 33.0. Currently there are 3 analysts that rate Fastenal Company a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Fastenal Company has been 1.7 million shares per day over the past 30 days. Fastenal has a market cap of $14.8 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.99 and a short float of 8.9% with 12.17 days to cover. Shares are up 6.8% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Fastenal Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • FAST's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FAST has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, FAST has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Trading Companies & Distributors industry and the overall market, FASTENAL CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • FASTENAL CO has improved earnings per share by 8.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FASTENAL CO increased its bottom line by earning $1.42 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($1.55 versus $1.42).
  • The gross profit margin for FASTENAL CO is rather high; currently it is at 53.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.90% is above that of the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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