Fastenal (FAST) Up 15.1% Since Last Earnings Report: Can It Continue?

Fastenal Q2 Earnings Meet Estimates, Sales Beat on Favorable Pricing

Fastenal reported mixed second-quarter 2026 results, with earnings meeting the Zacks Consensus Estimate and net sales beating the same. Conversely, year over year, both metrics grew notably. Fastenal continued to benefit from customer signings secured since the first quarter of 2024. Contract customer daily sales increased 17.6% year over year and represented 75.8% of quarterly revenues, up from 73.2% a year earlier.

Fastenal’s Q2 Earnings & Sales in Detail

Fastenal’s quarterly earnings of 33 cents per share were in line with the Zacks Consensus Estimate, but increased 15.9% year over year from 29 cents per share.

Net sales rose 14.7% year over year to $2.39 billion and surpassed the consensus mark of $2.34 billion by 1.9%. Growth reflected stronger customer contract signings, pricing actions and improved industrial production. Daily sales also advanced 14.7%.

FAST’s Daily Sales Growth Trends

Manufacturing daily sales increased 14.9%, with the segment contributing 75.9% of total sales. Heavy Manufacturing led the improvement with 18.1% growth and represented 44.1% of revenues. Other Manufacturing sales rose 10.8%.

Non-residential Construction daily sales advanced 17%, marking continued growth in the market. Other End-Market sales increased 14.1%, aided by transportation and warehousing customers. Total non-manufacturing daily sales climbed 15.1%.

Direct-Material daily sales grew 16.5% and accounted for 39.2% of revenues. Direct Fasteners and Hardware increased 16.8%, while direct cutting tools and abrasives rose 14.8%. Direct Non-Fasteners and Hardware sales improved 16.7%. Indirect-Material daily sales increased 14.1% and represented 60.8% of revenues. Indirect Fastener sales rose 14.6%, safety products increased 13.1%, and other indirect product lines advanced 14.6%. Direct materials slightly outpaced indirect products due to stronger fastener demand and manufacturing activity.

Fastenal’s Digital Sales Outpace Company Growth

Digital Footprint sales increased 16.2% to $1.49 billion and represented 61.6% of revenues, up from 61% in the prior-year quarter. The metric combines sales through Fastenal Managed Inventory technology with eBusiness sales that do not overlap with those services. FMI sales rose 16.4% to $1.08 billion and accounted for 44.6% of revenues. FAST signed 6,993 weighted FASTBin and FASTVend devices, up 8.3%, while the installed base grew 6.5% to 140,789 units. eBusiness sales increased 12.6% to $711.9 million.

FAST Holds Operating Margin Despite Pressure

Gross margin contracted 75 basis points (bps) to 44.6%. Unfavorable net price-cost reduced the margin by about 40 bps, while customer mix, transportation costs and rebate activity created additional pressure. Larger customers generally carry lower gross margins but produce greater profit dollars and operating efficiencies.

Selling, general and administrative expenses improved 80 bps to 23.5% of sales. Labor productivity and fixed-cost leverage offset higher incentive compensation, transportation and travel expenses. As a result, operating margin remained unchanged at 21%, while operating income increased 15.1% to $501.8 million.

Fastenal Generates Solid Cash and Returns Capital

Net income increased year over year by 15.9% to $382.8 million. Operating cash flow totaled $265.7 million, down 4.6%, and represented 69.4% of net income. Accounts receivable increased 17.6%, while inventories edged up 0.5% and accounts payable rose 25.2%. The company returned $305.1 million to shareholders through $275.4 million in dividends and $29.7 million in share repurchases. Total debt declined to $120 million from $230 million a year ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

At this time, Fastenal has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a score of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fastenal has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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