Fastenal Surges After Earnings Beat, Tariff Risks Loom
Fastenal Co. (NASDAQ: FAST) stock is up more than 4.5% in early trading after the company reported a double-beat in its second quarter earnings report. The company delivered a slight beat on both the top and bottom lines. However, the results were more bullish on a year-over-year (YOY) basis.
Fastenal reported earnings per share (EPS) of 29 cents for the most recent quarter. That was a penny higher than the 28 cents expected. It was also 11% higher than the split-adjusted 26 cents per share it delivered in the same quarter in 2024.
Revenue of $2.08 billion narrowly topped expectations of $2.07 billion. However, when viewed YOY, the company posted a gain of 8.6%. This was also the first time in the company’s history that it posted over $2 billion in revenue in a single quarter.
Fastenal is a leading distributor of industrial and construction supplies. The company’s portfolio includes fasteners, safety supplies, and other product lines. Because the company’s product lines are closely tied to manufacturing and industrial markets, the company’s results are considered a bellwether for this sector.
That’s particularly true since the company is reporting at the start of earnings season. However, taking a close look at this report may caution investors about what the company is saying about the manufacturing industry.
The Results May Be More About Efficiency Than Sector Demand
Fastenal’s results would seem to be bullish for industrial stocks. In addition to the headline numbers, the company reported a YOY increase in gross margin to 45.3% from 45.1%. This was due in part to improved margins on fastener sales and improvements with supplier-focused initiatives. The company’s YOY operating margin also increased to 21% from 20.2%.
However, it's important to put those margin numbers in context. In the company’s earnings presentation, Fastenal commented that the company’s regional leadership believes its growth was due “more to customer wins and (market) share gains than the overall market, which remains subdued.” The company also noted:
- The rapidly changing tariff environment is causing uncertainty.
- Manufacturing end markets outperformed primarily due to growth with key accounts.
- The fastener product line continued to lag behind non-fastener categories.
- Other end markets benefited from non-residential construction, warehousing, and data center demand.
This uncertainty is one reason the company expects its operating margins to be flat for the rest of 2025. It’s also likely the reason that Fastenal didn’t provide forward-looking guidance.
FAST Stock Is Confirming Bullish Momentum
The gap up in FAST stock at the market open has pushed the price decisively above the 50-period simple moving average (SMA) at $43.05. This is a bullish technical signal that suggests strengthening momentum and improving sentiment.
Solid volume supports the bullish move, confirming broad participation that's been in place since the company split its stock in May. The moving average convergence divergence (MACD) line continues to be above the signal line and supports a move higher.
Importantly, this isn’t just about the company’s earnings. The post-earnings move confirms an uptrend that’s defined the stock for the last month. FAST stock has been in a bullish pattern of higher highs and higher lows since the middle of June.
That said, investors will want to watch for potential resistance around the $46 level. A breakout above this level would put the stock close to the consensus analyst price target of $48.45.
FAST stock has been a standout performer in 2025, up 26%. That's pushed its valuation above its historical averages as measured by its 44x price-to-earnings (P/E) ratio. Investors looking to buy on weakness may want to look at an area around $44. This area marked resistance for the stock in the last month and corresponds to the 50-day simple moving average around $43.
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