What is FAST's Intrinsic value?

Fastenal Co (FAST) Intrinsic Value Analysis

Executive Summary

As of June 21, 2026, Fastenal Co's estimated intrinsic value ranges from $13.48 to $51.07 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $51.07 +11.3%
Discounted Cash Flow (5Y) $44.06 -4.0%
Dividend Discount Model (Multi-Stage) $39.31 -14.3%
Dividend Discount Model (Stable) $41.06 -10.5%
Earnings Power Value $13.48 -70.6%

Is Fastenal Co (FAST) undervalued or overvalued?

With the current market price at $45.89, the stock appears to be fairly valued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Fastenal Co's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.82
Cost of equity 6.5% 9.4%
Cost of debt 4.0% 4.5%
Tax rate 23.9% 24.0%
Debt/Equity ratio 0 0
After-tax WACC 6.5% 9.4%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $8,200 (FY12-2025) to $14,225 (FY12-2035)
  • Net profit margin expansion from 15% to 26%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $44 $50,403M 84.2%
10-Year Growth $51 $58,449M 71.2%
5-Year EBITDA $38 $43,486M 81.7%
10-Year EBITDA $45 $52,012M 67.6%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 79.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.9%
  • Long-term growth rate: 4.0%
  • Fair value: $39.31 (-14.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.4% (Low) to 6.5% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $12 to $70
  • Selected fair value: $41.06 (-10.5% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $1,171M
Discount Rate (WACC) 9.4% - 6.5%
Enterprise Value $12,431M - $18,155M
Net Debt $(184)M
Equity Value $12,615M - $18,338M
Outstanding Shares 1,148M
Fair Value $11 - $16
Selected Fair Value $13.48

Key Financial Metrics

Metric Value
Market Capitalization $52684M
Enterprise Value $52500M
Trailing P/E 40.54
Forward P/E 34.08
Trailing EV/EBITDA 14.95
Current Dividend Yield 193.23%
Dividend Growth Rate (5Y) 11.76%
Debt-to-Equity Ratio 0.00

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $15.32
Discounted Cash Flow (5Y) 25% $11.02
Dividend Discount Model (Multi-Stage) 20% $7.86
Dividend Discount Model (Stable) 15% $6.16
Earnings Power Value 10% $1.35
Weighted Average 100% $41.71

Investment Conclusion

Based on our comprehensive valuation analysis, Fastenal Co's intrinsic value is $41.71, which is approximately 9.1% below the current market price of $45.89.

Key investment considerations:

  • Strong projected earnings growth (15% to 26% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)
  • Historical dividend growth of 11.76%

Given these factors, we believe Fastenal Co is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.