Fastenal down, despite in-line results as gross margin remains under pressure
FAST
Fastenal reported quarterly results that met expectations, bolstered by market share gains and customer contracts. However, the stock tumbled as the market appeared to penalize the fact there were no real significant pleasant surprises, as well as persistent pressure on gross margins.
Valentin Aufrand
Published on 04/14/2026 at 02:04 am EDT
On Monday Fastenal posted quarterly results that were largely in line with expectations, although the stock fell by over 7% during trading, marking the biggest faller on the S&P 500, despite results in line. For the three months ended March, the US industrial and construction supplies distributor generated net income of $339.8m, or $0.30 per share (+13.6%), compared to $298.7m and $0.26 per share a year earlier. Revenue grew by 12.4% to $2.20bn.The group said that sales growth reflected the impact of contracts signed since Q1 2024, a slight improvement in industrial production, and a price impact of approximately 350bp. Contractual sales, which now represent 75.4% of the total, rose by 14.6%, while manufacturing activities continued to outperform. Growth was also supported by non-residential construction, transport and warehousing.However, the market reaction seems to reflect several reservations. Firstly, the results remained very close to the consensus. Secondly, the gross margin contracted to 44.6%, from 45.1% a year earlier, weighed on by an unfavorable price/cost effect, freight costs and certain customer rebates. During the conference call, management further acknowledged that price hikes had not been deployed quickly enough to fully offset inflation and uncertainties relating to customs duties.Fastenal nevertheless continues to highlight its technological leverage. Sales related to its "FMI" offering grew by 16.6% over the quarter, and weighted signings of "FASTBin" and "FASTVend" devices reached 6,950 units, up 8.3%. The group confirmed its annual target of 28,000 to 30,000 signings.