Value
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.9 |
| P/S | 5.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.9 |
| PEG | 3.5 |
| Analyst target | 3.0 |
- ▸Forward P/E: 36.5x
- ▸PEG: 3.33
FAST · Why this verdict
Why Fastenal (FAST) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Fastenal is a genuinely high-quality compounding franchise — wide economic moat, 34% return on equity, best-in-class margins of approximately 15%, and a perfect financial health score — but at 33.6 times forward earnings with a PEG of 3.32, the stock is priced for excellence at a level where the analyst consensus target has already been reached; uninspiring recent earnings delivery and elevated options defensiveness compound the case for patience over new exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business earns a return on equity of 34%, maintains net margins of approximately 15%, carries a wide economic moat, and scores at the maximum on its financial health assessment — a combination of compounding-quality characteristics that justifies a premium multiple over time and provides a durable buffer in an economic slowdown. Quality breakdown | Net margins remain above 14% and return on equity stays above 28% for the next 4 consecutive quarters. | →Stable |
| CounterThe 34% return on equity may be inflated by a buyback-reduced equity base rather than reflecting genuine economic returns on invested capital; if the underlying return on assets is more modest than ROE implies, the quality premium embedded in the current multiple is partly illusory. | ||
At 33.6 times forward earnings and a PEG of 3.32, the stock screens as one of the most expensive names in its universe, and the analyst consensus target has essentially been reached at current levels; this leaves almost no margin of safety and limits the expected return even under an optimistic fundamental scenario. Valuation breakdown | Forward price-to-earnings multiple compresses below 25 times from the current 33.6 times within 12 months. | →Stable |
| CounterA premium multiple can persist indefinitely when underpinned by franchise quality and recurring industrial distribution demand; if earnings growth re-accelerates, the PEG may compress organically without requiring a de-rating of the stock. | ||
The last four quarters include one beat, two in-line results, and one miss, with an average positive surprise of under 2%; a premium-valued franchise typically must consistently exceed expectations to sustain its multiple, and this delivery record does not meet that standard. Earnings | Average quarterly EPS surprise rises above 5% and stays there for 3 consecutive quarters. | ↓Deteriorating |
| CounterTwo consecutive in-line quarters at essentially zero surprise may reflect tight guidance precision rather than operational weakness; management may be setting expectations conservatively, preserving room to beat when a more favorable operating environment emerges. | ||
The put/call ratio of 1.37 indicates options market participants are positioned more defensively than offensively; with the stock trading above its options market equilibrium level, the combination of elevated defensive hedging and a rich fundamental valuation raises the probability of a reversion toward that equilibrium. Options | Put/call ratio falls below 0.8 and sustains there for 4 consecutive weeks. | ↑Improving |
| CounterElevated put/call ratios in high-quality names often reflect institutional hedging of existing long equity positions rather than outright bearish bets; unwinding of those hedges on a positive catalyst could itself become a mechanical tailwind. | ||
The business earns a return on equity of 34%, maintains net margins of approximately 15%, carries a wide economic moat, and scores at the maximum on its financial health assessment — a combination of compounding-quality characteristics that justifies a premium multiple over time and provides a durable buffer in an economic slowdown.
→StableQuality breakdown
- Expectation
- Net margins remain above 14% and return on equity stays above 28% for the next 4 consecutive quarters.
CounterThe 34% return on equity may be inflated by a buyback-reduced equity base rather than reflecting genuine economic returns on invested capital; if the underlying return on assets is more modest than ROE implies, the quality premium embedded in the current multiple is partly illusory.
At 33.6 times forward earnings and a PEG of 3.32, the stock screens as one of the most expensive names in its universe, and the analyst consensus target has essentially been reached at current levels; this leaves almost no margin of safety and limits the expected return even under an optimistic fundamental scenario.
→StableValuation breakdown
- Expectation
- Forward price-to-earnings multiple compresses below 25 times from the current 33.6 times within 12 months.
CounterA premium multiple can persist indefinitely when underpinned by franchise quality and recurring industrial distribution demand; if earnings growth re-accelerates, the PEG may compress organically without requiring a de-rating of the stock.
The last four quarters include one beat, two in-line results, and one miss, with an average positive surprise of under 2%; a premium-valued franchise typically must consistently exceed expectations to sustain its multiple, and this delivery record does not meet that standard.
↓DeterioratingEarnings
- Expectation
- Average quarterly EPS surprise rises above 5% and stays there for 3 consecutive quarters.
CounterTwo consecutive in-line quarters at essentially zero surprise may reflect tight guidance precision rather than operational weakness; management may be setting expectations conservatively, preserving room to beat when a more favorable operating environment emerges.
The put/call ratio of 1.37 indicates options market participants are positioned more defensively than offensively; with the stock trading above its options market equilibrium level, the combination of elevated defensive hedging and a rich fundamental valuation raises the probability of a reversion toward that equilibrium.
↑ImprovingOptions
- Expectation
- Put/call ratio falls below 0.8 and sustains there for 4 consecutive weeks.
CounterElevated put/call ratios in high-quality names often reflect institutional hedging of existing long equity positions rather than outright bearish bets; unwinding of those hedges on a positive catalyst could itself become a mechanical tailwind.
Per-dimension breakdown
Quality
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 4.9 |
| Op margin | 8.6 |
| Net margin | 7.8 |
| Current ratio | 9.1 |
| FCF quality | 5.0 |
| Moat | 8.2 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 35%
- ▸Strong margins: 16%
- ▸Earnings quality warning: 65% FCF/NI
- ▸Wide economic moat
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.4 |
| EPS growth | 6.1 |
Momentum
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 6.9 |
| OBV | 1.7 |
| MA position | 9.0 |
| Volume | 1.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 4.9 |
Insider
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.7 |
- ▸Negligible insider selling — $2,381,860 (0.004% of mkt cap)
Peer rank
6.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.6 |
| quality rank | 9.2 |
| growth rank | 7.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 2.1 |
| 52w position | 9.5 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.2 |
| days to cover | 6.0 |
| volatility | 5.2 |
| put call | 10.0 |
| implied vol | 7.5 |
| max pain risk | 3.0 |
| beta | 8.9 |
| debt equity | 9.6 |
- ▸Above max pain $25
Catalyst
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 2.5 |
| dividend safety | 3.0 |
| news activity | 5.0 |
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (6)
- MOMENTUM:4.9>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:81d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.6=NEGATIVE
Warning (2)
- MOMENTUM:4.9<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.60
Upside
-13.6%
Downside
8.5%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 58, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityConservative — Beta 0.69<0.8, Div 2.0%, Q=8.2
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 8.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.60 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 8.2, Risk (lower is worse) at 7.3, and Peer rank at 6.7; the weakest are Value at 3.1, Catalyst at 3.7, and Momentum at 4.9. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -1.60 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Premium Quality Franchise
Trip ifNet margin falls below 13% for 2 consecutive quarters.
- P2Rich Valuation Limits Upside
Trip ifForward price-to-earnings multiple compresses below 25 times from current 33.6 times.
- P3Soft Earnings Delivery
Trip ifAverage EPS surprise rises above 5% and stays there for 3 consecutive quarters.
- P4Elevated Put Call Ratio
Trip ifPut/call ratio falls below 0.5 for 4 consecutive weeks.