Fastenal Shares Slide as Q3 Profit Misses Expectations
The industrial supplier's slight earnings shortfall overshadowed an 11.7% increase in quarterly revenue, sending shares down over 4% in pre-market trading.
Shares of Fastenal (NASDAQ: FAST) fell more than 4% in pre-market trading after the industrial and construction supplies distributor reported third-quarter earnings that narrowly missed Wall Street expectations. The negative investor reaction came despite the company posting strong double-digit revenue growth, highlighting market sensitivity to profitability metrics.
For the third quarter, , just one cent shy of the consensus analyst estimate of $0.30. This slight miss overshadowed an otherwise robust top-line performance. Quarterly revenue came in at $2.13 billion, beating expectations and marking a significant 11.7% increase compared to the same period last year.
The company attributed the sales growth to a notable increase in customer contract signings and higher unit sales, which managed to thrive even in what it described as a 'slow industrial production environment.' This growth indicates solid underlying business momentum and demand for its products.
Further analysis of the company’s performance reveals several positive indicators. to 45.3% from 44.9% in the prior year, a result of successful supplier initiatives and internal efficiency programs. The operating margin also saw an improvement, rising to 20.7% of sales. Additionally, Fastenal demonstrated impressive financial health with its operating cash flow, which surged by 30.3% year-over-year to $386.9 million.
Despite these strong operational metrics, the market's initial focus remained squarely on the bottom-line miss. The pre-market sell-off suggests that investors are prioritizing profitability and are quick to react to any signs of pressure on earnings, even when sales are growing. Fastenal also declared a third-quarter cash dividend of 22 cents per share, reinforcing its commitment to returning value to shareholders. For its full-year 2025 outlook, the company projects its weighted FASTBin and FASTVend device signings to be between 25,000 and 26,000.