Fastenal (FAST) shares fell about 4% on Wednesday, October 14 (trading near $49), even though the industrial distributor beat on both lines in the third quarter. Sales rose 15.5% to $2.46 billion, ahead of the $2.44 billion consensus, and EPS of $0.35 topped the $0.34 estimate and last year’s $0.29. Net income climbed 19.7% to $401.6 million, per the company’s release.
Fastenal’s Biggest Customers Pay Less
The growth came from large contract customers, whose sales rose 18.8%, against 7.8% for everyone else. Those accounts buy at lower margins, and the mix shift cut gross margin by about 50 basis points.
Gross margin peaked at 45.32% in the second quarter of 2025 and fell to 44.33% by the fourth. It has hovered around 44.5% to 44.8% since, landing at 44.8% this quarter, down from 45.3% a year ago. Fastenal kept its 2026 goal of 27,000 to 29,000 weighted FASTBin and FASTVend device signings, a range it had already lowered in July.
Priced for a Cleaner Quarter
FAST trades at 38.23x NTM normalized earnings, 17% above its five-year average of 32.55x.
At that multiple, a small beat and a sequential uptick in gross margin weren’t enough for investors.
Two Ways to Read Fastenal’s Margin Trade
The bull read: gross margin rose about 20 basis points from the second quarter, operating margin still widened 90 basis points to 21.5%, and profit grew faster than sales. Fastenal is trading gross margin for volume and winning on the bottom line.
The bear read: the mix shift keeps weighing on gross margin, and September’s slower sales growth raises the question of how long volume can make up for it. At 38x earnings, that’s little room for error.
Both hold up, but the multiple settles it for now: the stock already prices in the bull case. The same big-customer mix question hangs over W.W. Grainger (GWW) and MSC Industrial (MSM). For Fastenal, the number to watch is monthly sales growth, which slowed to 14.4% in September in what management called a moderation from very strong levels.
Want to see where Fastenal’s margin and multiple go from here? You can pull up the same gross margin and NTM P/E charts on TIKR for free. Learn more here.
So what is Fastenal stock actually worth?
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