Fastenal’s second quarter was marked by strong sales growth and a positive market reaction, driven by robust contract signings and ongoing gains in market share despite a sluggish industrial environment. Management credited the increase in contract customer sales and the success of recent organizational changes for the improved performance. President Jeff Watts highlighted that contract signings rose to 84 during the quarter, well ahead of recent trends, and now account for over 73% of total revenues. CEO Dan Florness noted, “Our execution has dramatically changed and I feel like the organization is really aligned.”

Is now the time to buy FAST? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Fastenal’s Q2 Earnings Call

• David Manthey (Baird) asked about the profitability of large customer segments. CEO Dan Florness explained that contribution margins for accounts over $10,000 monthly align closely with company averages, driven by SG&A leverage from servicing larger customers.
• Ryan Merkel (William Blair) questioned gross margin outlook and the impact of deeper fastener inventory. Florness clarified that increased inventory supports higher-margin, unplanned spot buys, while Lisowski said margins should remain essentially flat for the year.
• Tommy Moll (Stephens) inquired about the potential for e-commerce growth and fastenal.com enhancements. Florness described a significant opportunity to capture more spot-buy business from both large and small customers by improving the digital platform.
• Chris Dankert (Loop Capital Markets) sought an update on the customer solution consultant program. President Jeff Watts reported ongoing expansion of this team, citing its success in winning regional contracts and supporting growth among mid-sized customers.
• Chris Snyder (Morgan Stanley) pressed for clarity on pricing actions related to tariffs. Florness and other executives explained that phased pricing increases exited the quarter at 3%, with further adjustments likely as trade policy evolves.

Catalysts in Upcoming Quarters

In the coming quarters, our analyst team will watch (1) the pace and effectiveness of Fastenal’s digital and e-commerce rollout, especially the relaunch of fastenal.com, (2) the company’s ability to sustain contract signings and double-digit sales growth amid macro uncertainty, and (3) the impact of tariff-related pricing actions on gross margins and customer retention. Leadership execution in managing supply chain costs and adapting to trade policy shifts will also be key areas of focus.

Fastenal currently trades at $46.06, up from $43.29 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

Our Favorite Stocks Right Now

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.