Contrasting NOW (DNOW) & Fastenal (FAST)
NOW (NYSE: DNOW) and Fastenal (NASDAQ:FAST) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.
This table compares NOW and Fastenal’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
96.7% of NOW shares are held by institutional investors. Comparatively, 83.0% of Fastenal shares are held by institutional investors. 3.3% of NOW shares are held by company insiders. Comparatively, 0.6% of Fastenal shares are held 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.
Earnings & Valuation
This table compares NOW and Fastenal’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|NOW||$2.34 billion||0.53||-$81.00 million||($1.56)||-7.38|
|Fastenal||$4.13 billion||2.93||$952.46 million||$1.82||23.11|
Fastenal has higher revenue and earnings than NOW. NOW is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations for NOW and Fastenal, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
NOW presently has a consensus price target of $19.33, indicating a potential upside of 67.97%. Fastenal has a consensus price target of $50.50, indicating a potential upside of 20.07%. Given NOW’s higher probable upside, equities research analysts clearly believe NOW is more favorable than Fastenal.
Fastenal pays an annual dividend of $1.28 per share and has a dividend yield of 3.0%. NOW does not pay a dividend. Fastenal pays out 70.3% of its earnings in the form of a dividend. NOW has raised its dividend for 6 consecutive years.
Volatility and Risk
NOW has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.
Fastenal beats NOW on 12 of the 17 factors compared between the two stocks.
NOW Inc. (NOW) is a global distributor to the oil and gas and industrial markets. The Company operates under the DistributionNOW and Wilson Export brands. Its segments include the United States, Canada and International. As of December 31, 2016, its segments, the United States, Canada and International, had over 200, 55 and 35 locations, respectively. The United States segment comprises United States Energy, United States Supply Chain and United States Process Solutions. NOW’s energy product offerings are used in the oil and gas industry, including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining, as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. It provides supply chain management to drilling contractors, exploration and production (E&P) operators, midstream operators, downstream energy and industrial manufacturing companies.
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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