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Investing.com - Wolfe Research has reiterated its Peerperform rating on Fastenal (NASDAQ:FAST) following the company’s second-quarter 2025 performance. According to InvestingPro data, the stock is trading near its 52-week high of $44.00, with a remarkable 35% return over the past year.
Fastenal reported operating expenses increased 6.3% in Q2 2025, lagging behind the sales rate and providing approximately 50 basis points of year-over-year SG&A leverage, with intensity at 24.4% of sales. This expense level was slightly higher than Wolfe Research’s expectation of 24.1% intensity, primarily due to employee-related expenses growing faster than top-line revenue.
The company delivered a 21.0% operating margin in Q2 2025, which was 20 basis points ahead of Wolfe Research’s estimate and 40 basis points above consensus, reflecting 30% incrementals. Wolfe Research expects year-over-year operating leverage to continue for the remainder of the year as sales continue to grow at a high single-digit to low double-digit clip.
Fastenal exceeded expectations across multiple metrics, including average daily sales, gross margins, free cash flow, and operating margins. The company’s earnings call is scheduled for 10 a.m. ET with dial-in number (877) 407-2991.
Despite the strong performance, Wolfe Research notes that valuation remains a barrier for ownership with the stock trading near peak levels on next-twelve-months price-to-earnings ratio, though the firm still expects a positive market reaction as estimates for the second half of 2025 are revised higher.
In other recent news, Fastenal reported second-quarter earnings per share of $0.29, surpassing both Raymond (NSE:RYMD) James and Wall Street expectations of $0.28. The company’s gross margin performance was a notable highlight, coming in at 45.3%, which exceeded analyst expectations and contributed to the earnings beat. Fastenal’s June average daily sales increased by 9.8% year-over-year, outperforming consensus estimates and typical seasonal patterns. Despite these positive results, Raymond James maintained its Underperform rating on Fastenal, citing concerns over the company’s valuation and long-term growth sustainability.
Morgan Stanley (NYSE:MS), on the other hand, reiterated its Equalweight rating, acknowledging the company’s strong price realization as a positive indicator for the second half of the year. In addition to the earnings report, Fastenal announced a two-for-one stock split, set to take effect in May 2025, which will double the number of shares owned by investors. This move is aimed at making shares more accessible to a broader base of investors. The stock split decision aligns with Fastenal’s ongoing global expansion efforts. Despite the mixed analyst ratings, Fastenal continues to navigate challenging market conditions effectively.
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