Fastenal (FAST) Operational Quality Rating (AA) | 2025 Old York Registry

(AA) | Industrials | Trade Distributors
By: Old York Financial
A Private Principal Report

the verdict

Old York Financial has assigned Fastenal (FAST) an Operational Quality (AA) Rating.

Fastenal is a master of Monopoly Characteristics through proximity. Their "Digital Footprint" (Vending + e-Business) now accounts for 62.1% of total sales. When a Fastenal vending machine is 50 feet away from a Boeing machinist, the "Pricing Power" is absolute because the cost of the machine stopping is 1,000x the cost of the bolt.

In 2025, they proved their resilience by clearing our 15% ROIC hurdle with ease (31.0%). They are a Tier-1 Equity Retraction machine, although they favor heavy dividends over aggressive buybacks, returning over $1 Billion to shareholders in 2025 alone.

the old york analysis

owner earnings: the high-turn engine

Fastenal’s model is increasingly "Asset Light" as they shift away from massive branches toward small, high-turn vending units.

• 2025 Total Revenue: $8.20 Billion (Up 8.7% YoY)

• 2025 Net Cash from Operations: $1.30 Billion

• (-) Maintenance CapEx: ($0.25 Billion)

• (+) Depreciation & Amortization: $0.18 Billion

• OLD YORK OWNER EARNINGS: $1.23 Billion

• Analyst Note: Maintenance CapEx is only ~19% of operating cash. This is elite for a company that moves physical "Steel and Zinc." They convert nearly 100% of Net Income into free cash.

the retraction (shareholder retirement)

• The Dividend Tilt: Fastenal is a "Yield Sovereign." They retired zero net shares in 2025, but they increased their dividend by 12.4%.

• 2025 Performance: Paid $1.004 Billion in dividends (a 79.8% payout ratio).

• The Verdict: While they aren't "cannibalizing" the float at the rate of ODFL or TransDigm, their total shareholder yield (Dividends + Debt reduction) remains among the highest in the Industrials sector.

operational efficiency

• ROIC: 31.0% (Smashes the 15% Yardstick floor; up from 30.1% in 2024).

• Net Profit Margin: 15.3% (Extremely high for a distributor).

• Operating Margin: 20.2% (Management targets the 20-21% corridor).

• EPS Growth (1-Year): +9.2% (Steady compounding despite a sluggish industrial economy).

the fortress check

• The Moat: 136,600+ FMI (Fastenal Managed Inventory) devices. Once those machines are bolted to a customer's floor, the competitor (Grainger/MSC) is effectively locked out of that "Point of Use."

• Pricing Power: Added 310–340 basis points to growth in 2025 through price alone. This is the definition of a "Price Maker."

• Customer Lock-in: 50k+ monthly spend sites grew 14%. They are winning the big accounts where the moat is deepest.

why it’s rated (AA)

• Elite ROIC: A 31% return on capital is nearly double what we require for the Registry.

• Technological Edge: They aren't just selling screws; they are selling data and inventory reduction.

• The "A" Cap: The "Large-Account Tradeoff" is real. As they win bigger contracts, gross margins are feeling a slight "squeeze" (down 50 bps in Q4). This prevents the (AAA) status reserved for those with expanding margin profiles.

final determination

Rating: Old York Quality (AA)

Classification: The Vending Sovereign.

Fastenal is the "Toll Collector" of the American manufacturing floor. It receives a (AA) because it combines a software-like lock-in with a 31% ROIC, and its 2025 performance proves it can grow even when the macro environment is "heavy."

Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager.