Al Root

Industrial distributor Fastenal sells tens of thousands of products to thousands of businesses, making its earnings a bellwether for the U.S. manufacturing sector.

Things are still "sluggish." Fastenal is doing what it can to manage through the weakness.

The industrial distributor on Tuesday reported fourth-quarter earnings per share of 26 cents from sales of $2 billion, in line with analysts' estimates.

A year ago, Fastenal reported fourth-quarter earnings of 23 cents a share from sales of $1.8 billion. (Fastenal split its shares 2-for-1 in 2025).

Despite meeting expectations, Fastenal declined 4.7% to $41.69 in premarket trading, dropping along with the U.S. stock market.

Determining exactly why isn't easy. Stocks tumbled on Tuesday as investors worried about President Trump's plan to impose tariffs on NATO members unless they allow the U.S. to acquire Greenland. S&P 500 and Dow Jones Industrial Average futures were down 1.5% and 1.3%, respectively. The U.S. dollar index was down 0.9%. Gold rose 3% to more than $4,700 an ounce.

Despite the drop in Fastenal shares, the quarter looked OK. Daily sales, a measure Fastenal uses to gauge overall activity, rose 11.1% in the fourth quarter. The growth came despite "sluggish" industrial production, according to the company.

To be sure, investors would like to see better performance. But the weakness can't be a complete surprise. Manufacturing activity has been declining for a while. The Institute for Supply Management's Purchasing Managers Index, or PMI, came in at 47.9 for December, down from 48.2 for December. A reading above 50 indicates growth. The December reading was the 10th consecutive reading below that level. Outside of a couple of positive months in 2025, the manufacturing economy has been shrinking for about three years.

Those are Fastenal's customers. It's continued to grow despite the weak backdrop by adding customers. Foreign exchange also helped boost growth, a little, in the fourth quarter.

BofA Securities analyst Sabrina Abrams was looking for pricing growth and cost discipline. She got it. Pricing rose more than 3 percentage points year over year. Operating profit margins expanded slightly.

She rates shares Buy and has a $48 price target on the stock.

Overall, 24% of analysts covering Fastenal shares rate them Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Fastenal shares is about $45.

Coming into Tuesday, shares of the industrial distributor have risen 15% over the past 12 months.

Write to Al Root at allen.root@dowjones.com

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January 20, 2026 07:37 ET (12:37 GMT)

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