By Rob Otman
Fastenal (Nasdaq: FAST) is a $13 billion company today. Investors that bought shares one year ago are sitting on a 0.72% total return. That’s below the S&P 500’s return of 19.3%.
Fastenal stock is underperforming the market. It’s beaten down… so is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Fastenal reported a recent EPS growth rate of 4.55%. That’s below the trading companies industry average of 80.07%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the trading companies industry is 28.59. And Fastenal’s ratio comes in at 24.39. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Fastenal stock is 18.42%. That’s below the trading companies industry average of 121.88%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Fastenal’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Fastenal comes in at 12.81% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Fastenal’s profit margin is above the trading companies average of -43.57%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Fastenal is 26.68%, and that’s above its industry average ROE of 10.64%.
Fastenal stock passes five of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
If you’re interested in finding Strong Buy stocks yourself, check out Fundamental Analysis Pro. It’s a free five-part mini-course that will teach you how to grade stocks like a Wall Street veteran. Click here to learn more. …read more
Source:: Investment You
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