Is Fastenal's Business Sending Warning Signs to Investors? 3 Things to Watch
Fastenal (NASDAQ: FAST) is a cyclical company that sells fasteners and tools to industrial companies like manufacturers. Despite a business that rises and falls along with economic activity, it has an impressive dividend history, with around a quarter of a century of annual increases under its belt. If you are a dividend growth investor, there are three things you need to watch about Fastenal today.
1. The big picture is weakening
Fastenal provides a pretty detailed look into the trends in its business. However, the top level is still very interesting. Daily sales rate growth hit a recent peak in the first quarter of 2022, as the world was still opening back up from the economic shutdowns used to slow the spread of the coronavirus. The peak value on this broad growth metric was 18.4%.
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To be fair, that's not really a sustainable number and was actually representative of the recovery taking place at the time. So a pullback was almost inevitable. And that's exactly what has happened. The worrisome part is that the rate has declined every single quarter since that high-water mark, with daily sales rate growth sitting at 5.9% in Q2 2023.