Fastenal Co. :FAST-US: Earnings Analysis: Q4, 2016 By the Numbers : March 8, 2017

Fastenal Co. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Fastenal Co. – W.W. Grainger, Inc., WESCO International, Inc., Anixter International Inc. and Lawson Products, Inc. (GWW-US, WCC-US, AXE-US and LAWS-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 947.95 million, Net Earnings of USD 114.81 million.
  • Gross margins narrowed from 49.91% to 49.78% compared to the same period last year, operating (EBITDA) margins now 22.31% from 22.12%.
  • Year-on-year change in operating cash flow of -8.47% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 947.95 1013.12 1014.29 986.68 922.79
Revenue Growth (%YOY) 2.73 1.8 1.65 3.5 -0.37
Earnings (mil) 114.81 126.93 131.52 126.23 111.9
Earnings Growth (%YOY) 2.59 -7.01 -6.3 -1.08 -5.48
Net Margin (%) 12.11 12.53 12.97 12.79 12.13
EPS 0.4 0.44 0.45 0.44 0.39
Return on Equity (%) 23.9 26.88 28.51 27.87 24.97
Return on Assets (%) 17.01 18.7 19.7 19.51 17.81

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Market Share Versus Profits

Revenues History
Earnings History

FAST-US‘s change in revenue this period compared to the same period last year of 2.73% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that FAST-US is holding onto its market share. Also, for comparison purposes, revenues changed by -6.43% and earnings by -9.55% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 22.12% to 22.31%. For comparison, gross margins were 49.34% and EBITDA margins were 22.65% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

FAST-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 138.80 days, compared to last year’s level of 128.02 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

FAST-US‘s change in operating cash flow of -8.47% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Fastenal Co.

Company Profile

Fastenal Co. engages in the provision of fasteners, tools, and supplies which can help in the manufacture of products, build structures, protect personnel, and maintain facilities and equipment. It operates under the following brands: Agent, Aspect, Blackstone, Body Guard, Clean Choice, DynaFlo, EquipRite, FMT, FNL, Northway, Power Phase, ProFitter, Regiment, Rock River, Stronghold, Talon, and Tritan. The company was founded by Robert A. Kierlin, Michael M. Gostomski, Henry K. McCannon, John D. Remick, and Stephen M. Slaggie in November 1967 and is headquartered in Winona, MN.

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