1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Grass Hopper
Grass Hopper
Articles (550)  | Author's Website |

Sequoia Fund's Discussion of Fastenal

March 07, 2014 | About:

Fastenal had a challenging year. Sales growth decelerated to 6% from 13% the prior year, reflecting slowing sales to end markets such as mining, military, and non-residential construction. The modest sales growth result produced minimal operating leverage and the operating profit margin stayed flat at 21.4%. Earnings per share increased 7% to $1.51. Fastenal’s owners are not accustomed to such modest results.

Fortunately, Fastenal’s creative and aggressive management is not standing still and is taking action to improve both top line growth and profitability. Starting in the third quarter of 2013, Fastenal began aggressively adding salespeople at its store locations. Management believes that there is a strong long-term correlation between the increase in sales personnel and revenue growth. The cost of investing in new sales people has had a short-term negative impact on profitability but should enable Fastenal to return to mid-teens sales and earnings growth in the near future. There is risk in adding sales people when demand appears weak for all industrial distributors. Still, we believe Fastenal’s long-term prospects are healthy.

Source: Sequoia Fund's 2013 Annual Report - Management's Discussion of Fund Performance

About the author:

Rating: 4.0/5 (2 votes)


Please leave your comment:

GuruFocus has detected 6 Warning Signs with Fastenal Co $FAST.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

User Generated Screeners

melblannHigh Quality
james scarrJames
worldmetalsHow to Find Good Dividend Stoc
Roger9860ubnt peers
Bogdan BednarskiShares Buyback W1 2007
Bogdan BednarskiShares Buyback W1 2006
pbarker46Low short, low E10
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)