Head to Head Review: Applied Industrial Technologies (NYSE:AIT) versus Fastenal (FAST)
Applied Industrial Technologies (NYSE: AIT) and Fastenal (NASDAQ:FAST) are both mid-cap industrial products companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitabiliy, institutional ownership and earnings.
Applied Industrial Technologies pays an annual dividend of $1.16 per share and has a dividend yield of 2.0%. Fastenal pays an annual dividend of $1.28 per share and has a dividend yield of 2.9%. Applied Industrial Technologies pays out 42.6% of its earnings in the form of a dividend. Fastenal pays out 70.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Applied Industrial Technologies has raised its dividend for 7 consecutive years and Fastenal has raised its dividend for 6 consecutive years.
This table compares Applied Industrial Technologies and Fastenal’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Applied Industrial Technologies||4.20%||15.70%||8.15%|
Valuation & Earnings
This table compares Applied Industrial Technologies and Fastenal’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Applied Industrial Technologies||$2.55 billion||0.88||$208.18 million||$2.72||21.14|
|Fastenal||$4.13 billion||3.03||$952.46 million||$1.82||23.86|
Fastenal has higher revenue and earnings than Applied Industrial Technologies. Applied Industrial Technologies is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Applied Industrial Technologies has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for Applied Industrial Technologies and Fastenal, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Applied Industrial Technologies||0||1||0||0||2.00|
Applied Industrial Technologies presently has a consensus price target of $63.00, indicating a potential upside of 9.57%. Fastenal has a consensus price target of $50.57, indicating a potential upside of 16.47%. Given Fastenal’s stronger consensus rating and higher possible upside, analysts clearly believe Fastenal is more favorable than Applied Industrial Technologies.
Institutional and Insider Ownership
88.2% of Applied Industrial Technologies shares are owned by institutional investors. Comparatively, 82.6% of Fastenal shares are owned by institutional investors. 4.4% of Applied Industrial Technologies shares are owned by company insiders. Comparatively, 0.6% of Fastenal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Fastenal beats Applied Industrial Technologies on 13 of the 18 factors compared between the two stocks.
About Applied Industrial Technologies
Applied Industrial Technologies, Inc. is an industrial distributor in North America, Australia and New Zealand, serving maintenance, repair and operations (MRO), and original equipment manufacturing customers in various industries. In addition, the Company provides engineering, design, and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber, and fluid power shop services. It operates in two segments: service center-based distribution and fluid power businesses. The service center-based distribution segment provides customers with a range of industrial products primarily through a network of service centers. The fluid power businesses segment consists of specialized regional companies that distribute fluid power components, design and assemble fluid power systems, and perform equipment repair. The fluid power businesses primarily sell products and services directly to customers rather than through the service centers.
Fastenal Company is engaged in wholesale distribution of industrial and construction supplies. The Company is engaged in fastener distribution, and non-fastener maintenance and supply business. As of December 31, 2016, it distributed these supplies through a network of approximately 2,500 stores. Its customers are in the manufacturing and non-residential construction markets. The manufacturing market includes both original equipment manufacturers (OEM) and maintenance, repair, and operations (MRO). The non-residential construction market includes general, electrical, plumbing, sheet metal and road contractors. Other users of its products include farmers, truckers, railroads, oil exploration, production and refinement companies, mining companies, federal, state, and local governmental entities, schools and certain retail trades. Its original product offerings are fasteners and other industrial and construction supplies, many of which are sold under the Fastenal product name.
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