Analyst Note| Brian Bernard, CFA, CPA |
We're maintaining our $38 per share fair value estimate for wide-moat rated Fastenal after the firm reported solid first-quarter results. Reported revenue increased nearly 4% year over year to $1.4 billion (sales growth was over 5% adjusting for one less business day during the quarter). Daily sales of safety products were almost 15% higher than the year-ago quarter as pandemic-related demand persisted. However, this product line will face tough prior-year sales comparisons over the second half of 2021. On the other hand, fastener sales growth turned positive (4% growth) for the first time since the fourth quarter of 2019. This return to growth is a sign that the United States economy is rebounding, and we expect growth will accelerate for this product line. We continue to model mid-single-digit consolidated sales growth in 2021 with a return to low-double-digit growth thereafter.