NEW YORK (TheStreet) -- Fastenal (FAST) shares experienced their largest decline in six months today, dropping -4.2% to $46.15 on Friday.
The decline follows the release of the company's first quarter earnings results which saw a 12.1% rise in revenue to $949.9 million, but missing analysts estimates of $952.45 million.
The company also reported earnings of 44 cents per diluted share in line analysts estimates.
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TheStreet Ratings team rates FASTENAL CO as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FASTENAL CO (FAST) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, growth in earnings per share, increase in net income and expanding profit margins. 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 analysis by TheStreet Ratings Team goes as follows:
- FAST's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 8.7%. 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 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
- FASTENAL CO's earnings per share improvement from the most recent quarter was slightly positive. 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 $1.51 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.51).
- The net income growth from the same quarter one year ago has exceeded that of the Trading Companies & Distributors industry average, but is less than that of the S&P 500. The net income increased by 2.6% when compared to the same quarter one year prior, going from $109.05 million to $111.93 million.
- The gross profit margin for FASTENAL CO is rather high; currently it is at 53.15%. Regardless of FAST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FAST's net profit margin of 12.77% compares favorably to the industry average.
- You can view the full analysis from the report here: FAST Ratings Report