Fastenal Company FAST reported first-quarter fiscal 2026 results in which earnings met the Zacks Consensus Estimate, while revenues modestly surpassed expectations. Both metrics increased on a year-over-year basis.
Shares were down 2.4% in pre-market trading on Monday following the announcement.
Results were supported by stronger daily sales, driven by customer contract signings and broad-based demand across key end markets, along with favorable contributions from product pricing and foreign exchange.
FAST’s Q1 Revenues & Earnings Performance
Fastenal reported earnings per share (EPS) of 30 cents, in line with the Zacks Consensus Estimate, but up 13.6% year over year from 26 cents in the prior-year quarter. Net income increased 13.8% year over year to $339.8 million.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Net sales rose 12.4% year over year to $2.2 billion in the first quarter of fiscal 2026, modestly surpassing the Zacks Consensus Estimate by 0.04%, with both periods reflecting 63 business days. Average daily sales increased to $34.9 million from $31.1 million. Management attributed the performance to improved customer contract signings since the first quarter of 2024, alongside a slight improvement in industrial production during the quarter.
Pricing was a notable contributor. Product pricing added roughly 350 bps (basis points) to net sales growth in the period, while foreign exchange provided a benefit of about 60 bps.
Margin Trends: Mixed but Stable
Gross profit increased 11.2% year over year to $982.9 million, but gross margin declined 50 bps to 44.6% from 45.1%. Management cited unfavorable price/cost of about 50 basis points as the primary driver, with additional headwinds from transportation and certain customer rebates. Customer mix also remained a structural pressure as growth skewed toward larger customers with lower gross margins.
Selling, general, and administrative expenses were 24.3% of net sales, down from 25% a year ago, supported by productivity-driven leverage, partially offset by higher bonuses and commissions tied to improved business activity. Operating income rose 13.6% year over year to $447.6 million, and operating margin increased to 20.3% from 20.1%.
Segment & Customer Highlights
Fastenal reported solid performance across product categories, with direct materials slightly outpacing indirect materials, supported by strength in manufacturing customers and continued benefits from the fastener expansion project.
Direct materials, which include fasteners, cutting tools and other production-related items, recorded daily sales growth of 13.1% year over year and accounted for 38.8% of net sales, up from 38.7% in the year-ago quarter. Growth was led by direct fasteners and hardware, which rose 13.8% year over year and represented 21% of sales.
Indirect materials, comprising safety supplies and other MRO-related items, posted daily sales growth of 12.4% and made up 61.1% of net sales, slightly lower than last year.
Fastenal’s manufacturing exposure remained the primary driver. Heavy manufacturing daily sales grew 14.1% year over year and represented 44% of total sales in the first quarter, while other manufacturing grew 9.9% and made up 32.2%. Combined manufacturing end markets accounted for 76.2% of sales during the period.
Outside manufacturing, performance also held up. Non-residential construction daily sales rose 17.2% year over year and represented 8.2% of sales, while other end markets rose 11.3% and contributed 15.6% of the revenue mix.
FAST’s technology-enabled channels continued to scale. Digital Footprint sales rose to $1.37 billion in the quarter, up from $1.21 billion a year ago, and represented 61.5% of total sales. FMI sales increased to $1 billion and accounted for 44.9% of sales, with FASTStock sales of $279.8 million and FASTBin/FASTVend sales of $721.6 million. eBusiness sales were $648.8 million and represented 29.1% of sales.
Balance Sheet & Capital Allocation
FAST ended the first quarter of 2026 with $308.6 million in cash and cash equivalents, up from $276.8 million at the end of fiscal 2025. Long-term debt stood at $100 million, unchanged from the prior-year period.
Total liquidity remained solid, supported by strong operating cash flow of $378.4 million in the quarter, up 44.3% from the first quarter of 2025 and representing 111.4% of net income compared with 87.8% in the prior-year period.
Shareholder returns remained consistent. The company returned $295.7 million through dividends of $275.6 million and share repurchases of $20.1 million during the first quarter.
FAST’s Outlook & Commentary
For 2026, the company expects investment in property and equipment, net of proceeds from sales, to increase year over year. This anticipated growth is driven by higher spending to replace its Atlanta hub facility and enhance picking capacity and efficiency across the hub network, increased investment in trucking and elevated IT spending as previously delayed projects continue into 2026.
FAST’s Zacks Rank & Other Key Picks
Fastenal currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the Industrial Products sector are:
Graham Corporation GHM flaunts a Zacks Rank #1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 55.4%, on average. GHM stock has surged 51.6% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Graham’s fiscal 2026 sales and EPS indicates growth of 13.5% and 10.5%, respectively, from the prior-year levels.
Astec Industries, Inc. ASTE flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 23.8%, on average. ASTE stock has gained 32.5% in the past six months.
The Zacks Consensus Estimate for Astec’s 2026 sales and EPS indicates growth of 13% and 13.5%, respectively, from the prior-year levels.
Flowserve Corporation FLS presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 17.3%, on average. FLS stock has jumped 64.2% in the past six months.
The Zacks Consensus Estimate for Flowserve’s 2026 sales and EPS indicates growth of 6.3% and 12.9%, respectively, from the year-ago period’s levels.
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This article originally published on Zacks Investment Research (zacks.com).