Latest news with #FastenalManagedInventory
CNBC
17-07-2025
- Business
- CNBC
Best Stocks: A company that's indispensable to its customers with a stock in a pristine uptrend
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — A business that makes itself indispensable to its customers ends up being a business with a defensible moat, predictable cash flow, SG & A expenses in check and a happy employee culture. I like to think I am running such a business in wealth management — by incorporating tax and insurance in-house for wealth management clients, we've made ourselves indispensable. The more our clients come to rely on us for, the higher the engagement, the less risk of turnover. Customer turnover is expensive. Companies that build indispensable services experience less disruptive churn and shareholders benefit as a result. Some of the biggest winners in the history of the stock market have had this characteristic. Think Salesforce, Apple, Costco, and Starbucks. For many, interacting with these companies is part of their regular routine, and it would take a lot for a competitor to pry them away. As an investor, I am always looking for stories like the one we're about to tell. Sean has written up a piece describing the strategy Fastenal (FAST) uses to make itself indispensable to its customers and the tactics that they employ to execute the strategy. We'll take a look at the stock's technicals as well but, first, it's story time. Best Stock Spotlight: Fastenal Co (FAST) On the list since: 4/12/2025 Sean — Fastenal is not just an industrial company selling screws and bolts, they have successfully vertically integrated their business to allow for more predictable, higher margin relationships with customers. Their stock price is reflecting the momentum the business is seeing. The long-term trend in this stock looks incredible: Fastenal acts more like a logistics and inventory partner than a typical industrial supplier. FAST sets up industrial-level vending machines, bins, and on-site locations that Fastenal stocks and monitors. FAST has one of the densest networks in terms of stores and distribution centers. This allows them to achieve economies of scale in purchasing, logistics, and inventory management. One of their largest focuses has been the "Fastenal Managed Inventory" — a digitized tech platform that fulfills, tracks, processes and delivers products to customers. Fastenal is creating dashboards monitoring inventory and supplying that inventory to customers. Via Quartr, 44.1% of total sales came through FMI technology in Q2 2025, up from 41.8% in Q2 2024 and 39.8% in Q2 2023. There are 132,174 integrated devices installed in total, which is up 10.8% year-over-year. Diving into their earnings from Monday of this week, the company beat on top and bottom lines, sending the stock about 4% higher post-earnings. Sales were up 8.6% year-over-year, operating margin improved to 21.0% from 20.2% last year, and earnings per share was up 12.7% year-over-year. This company is taking tariffs head-on. FAST dedicated an entire slide in their presentation to the current trade situation (via Fastenal): The CFO noted they have been proactively engaging with customers this year as it relates to tariff costs. From the CFO: "Fastenal has historically been able to win market share during periods of disruption on the strength of our nimble sales, our frugal and adaptive culture and the weight of the technologies and the global supply chain resources we can apply to finding solutions to customer challenges. This is our expectation in the current environment." FAST has implemented 3 pricing changes and plans on a phased approach to increase prices 140-170 basis points, depending on trade policy in 2025. The stock is within 5% of new all time highs. It sits about 8% above its 50 day moving average and about 15% above its 200 day moving average, well within a defined uptrend. Risk management Josh — This one's easy. The stock is slightly overbought thanks to the post-earnings reaction from the start of this week. I might give it a day or two to work off some of that overbought condition, even if I am not necessarily expecting much of a pullback. In a situation like this, position sizing is the key thing to focus on. If you're worried you missed it, you can enter the trade in stages. Worst-case scenario, it keeps rolling higher and you don't have enough. It happens. Above, I'm showing you a three-year chart with a 50-WEEK moving average (orange line, currently at $38 and change). I want you to pay attention to how pristine this uptrend has been. Since 2023, the dip-buyers have consistently come in as the stock flirted with its trendline and they bought it right back up. I would take advantage of any weakness here and then follow the trade with a mental stop loss (or physical if you're easily distracted) at that 50-week, checking on it every Friday to see if something's changed. If not, I'd stay long. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
Yahoo
17-06-2025
- Business
- Yahoo
5 Insightful Analyst Questions From Fastenal's Q1 Earnings Call
Fastenal's first quarter results were well received by the market, as the company delivered both revenue and non-GAAP profit in line with Wall Street expectations. Management attributed the positive outcome to strong internal execution, including expanded customer relationships and higher adoption of Fastenal Managed Inventory (FMI) solutions. CEO Dan Florness emphasized that, despite ongoing weakness in underlying industrial demand, Fastenal's growth was 'mostly self-help,' reflecting successful sales initiatives and increased customer engagement. The quarter also featured a meaningful increase in device deployments, with FMI units growing 12.5%. Is now the time to buy FAST? Find out in our full research report (it's free). Revenue: $1.96 billion vs analyst estimates of $1.96 billion (3.4% year-on-year growth, in line) Adjusted EBITDA: $437.4 million vs analyst estimates of $438.4 million (22.3% margin, in line) Operating Margin: 20.1%, in line with the same quarter last year Sales Volumes rose 12.4% year on year (10.5% in the same quarter last year) Market Capitalization: $48.46 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. David Manthey (Baird) asked if Fastenal's contracts can absorb abrupt tariff increases. CEO Dan Florness confirmed pricing flexibility, but stressed the importance of sourcing alternatives and transparency with customers. Stephen Volkmann (Jefferies) questioned how Fastenal manages the timing of substantial tariff-driven price increases. Florness and CFO Holden Lewis explained that direct sourcing and rapid inventory turnover help align cost and price changes for customers. Ryan Cook (Wolfe Research) inquired about trends in SG&A expenses and the outlook for cost leverage. Lewis said leveraging SG&A is possible if mid-single-digit growth continues, but variable compensation may rise with improved operating results. Tommy Moll (Stephens) sought details on recent pricing actions and the implementation cadence. Lewis and Florness noted staggered price increases, especially for fasteners affected by steel tariffs, with customer discussions driving timing. Chris Snyder (Morgan Stanley) asked about opportunities to shift fastener production from Asia to North America or Mexico. Florness explained that a lack of regional manufacturing scale and tariff policy uncertainty limit near-term reshoring feasibility. In upcoming quarters, our team will be closely tracking (1) the effectiveness and customer acceptance of additional tariff-driven pricing actions, (2) progress toward Fastenal's digital sales penetration targets and growth in FMI deployments, and (3) the company's success in managing inventory and supply chain adjustments amid ongoing trade policy uncertainty. Execution in e-commerce and large account expansion will also be important signals. Fastenal currently trades at $42.04, up from $37.87 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
12-04-2025
- Business
- Yahoo
Fastenal Co (FAST) Q1 2025 Earnings Call Highlights: Navigating Growth Amidst Market Challenges
Revenue Growth: Sales grew by 3.4% with daily sales up 5%. Operating Margin: 20.1%, down 50 basis points year-over-year. Gross Margin: 45.1%, down 40 basis points from the previous year. SG&A Expenses: 25% of sales, up from 24.9% in the prior year. EPS: $0.52, flat compared to the first quarter of 2024. Operating Cash Flow: $262 million, representing 88% of net income. Inventory Growth: Up 11.9% year-over-year. Accounts Receivable: Increased by 5.4%. Accounts Payable: Increased by 23.9%. Capital Expenditure: $53.8 million, up from $48.3 million in the previous year. FMI Device Deployment: 129,996 devices, a growth of 12.5%. Digital Footprint Sales: 61% of total sales, up from 59% the previous year. Dividend Increase: Increased from $0.43 to $0.44 per share. Warning! GuruFocus has detected 4 Warning Sign with MS. Release Date: April 11, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Fastenal Co (NASDAQ:FAST) reported a 3.5% increase in sales for Q1 2025, with daily sales growth of 5%, indicating strong execution despite a sluggish market. The company has successfully expanded its Fastenal Managed Inventory (FMI) program, with 43% of revenue now going through technology platforms, enhancing operational efficiency. Fastenal Co (NASDAQ:FAST) experienced record customer attendance at its annual expo, reflecting strong customer engagement and interest in the company's offerings. The company increased its dividend from $0.43 to $0.44, demonstrating confidence in its financial stability and commitment to returning value to shareholders. Fastenal Co (NASDAQ:FAST) has made significant progress in diversifying its supply chain, which has helped mitigate risks associated with tariffs and geopolitical uncertainties. The company's operating margin decreased by 50 basis points to 20.1% in Q1 2025, partly due to one less selling day compared to the previous year. Fastenal Co (NASDAQ:FAST) faced higher costs from third-party freight providers and vehicle leases, impacting its gross margin, which fell by 40 basis points. The company reported flat earnings per share (EPS) of $0.52 compared to Q1 2024, indicating challenges in achieving profit growth. Inventory levels increased by 11.9%, reflecting efforts to improve product availability but also indicating potential inefficiencies in inventory management. Fastenal Co (NASDAQ:FAST) acknowledged the need to improve its e-commerce capabilities, particularly for smaller customers, to capture more market share in the online space. Q: How is Fastenal prepared to handle the potential impact of a 145% tariff on Chinese imports? A: Daniel Florness, CEO, explained that Fastenal's contracts allow for price adjustments to absorb such increases. The company is focusing on sourcing alternatives and maintaining transparency with customers about these options. Fastenal's direct sourcing capabilities provide visibility that helps in managing these challenges. Q: How does Fastenal plan to manage the unprecedented magnitude of tariff increases for its customers? A: Florness noted that while there is no way to cushion a 145% tariff, Fastenal's inventory provides a buffer, allowing time to explore sourcing alternatives. The company aims to align cost impacts with pricing adjustments and leverage its direct sourcing capabilities to provide clarity and options to customers. Q: Can you elaborate on the SG&A trends and expectations for the rest of the year? A: Holden Lewis, CFO, mentioned that SG&A expenses were impacted by vehicle lease costs due to accelerated fleet cycling. He expects SG&A to leverage if sales growth continues at a mid-single-digit rate, as the company manages costs effectively and anticipates some reloading of incentive compensation. Q: What is the outlook for Fastenal's gross margin in 2025 given the current pricing environment? A: Florness emphasized that while historically Fastenal has defended gross margin percentages, the focus is on managing customer relationships and supply chain solutions. The company aims to balance the needs of customers, suppliers, and shareholders while navigating the current tariff environment. Q: Are there opportunities to shift fastener production to Mexico or North America to mitigate supply chain risks? A: Florness acknowledged the potential benefits of North America's stable energy costs but noted the lack of scale in fastener production compared to Asia. He highlighted the challenges of investing in new manufacturing capabilities without long-term tariff certainty. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
