Earnings Update: Here's Why Analysts Just Lifted Their Fastenal Company (NASDAQ:FAST) Price Target To US$72.20

Simply Wall St · 10/18 10:29

It's been a pretty great week for Fastenal Company (NASDAQ:FAST) shareholders, with its shares surging 11% to US$77.64 in the week since its latest third-quarter results. Fastenal reported in line with analyst predictions, delivering revenues of US$1.9b and statutory earnings per share of US$0.52, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Fastenal

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NasdaqGS:FAST Earnings and Revenue Growth October 18th 2024

Taking into account the latest results, the most recent consensus for Fastenal from 16 analysts is for revenues of US$8.15b in 2025. If met, it would imply a decent 8.9% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 9.4% to US$2.20. Before this earnings report, the analysts had been forecasting revenues of US$8.09b and earnings per share (EPS) of US$2.20 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.5% to US$72.20. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Fastenal at US$86.00 per share, while the most bearish prices it at US$51.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 7.1% growth on an annualised basis. That is in line with its 8.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.4% per year. So it's pretty clear that Fastenal is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Fastenal analysts - going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.