Fastenal’s Stock Split: A Smart Move or Overvalued Play? Here’s What Investors Need to Know
36min read The stock market is all about timing—and sometimes, companies use tools like stock splits to reset expectations. Fastenal (FAST) just pulled the trigger on a two-for-one stock split, announced on April 23, 2025, sending shares soaring on news of its aggressive growth strategy. But here’s the question: Is this a sign of confidence, or a desperate move to make shares look more “affordable” in an overvalued market? Let’s dig in.
The Split Basics
The split will take effect on May 21, 2025, for shareholders who own shares as of May 5. The move lowers the per-share price from around $80 to roughly $40, but keeps the company’s total market cap intact at $46 billion. This isn’t Fastenal’s first rodeo—prior splits in 2019 and earlier years aimed to boost liquidity and accessibility for smaller investors.
But here’s the key: stock splits alone don’t create value. They’re purely structural. The real question is: Does Fastenal’s business justify its $46 billion valuation?
The Numbers Behind the Split
Fastenal’s first-quarter 2025 results give us a starting point. The company beat revenue estimates with $1.96 billion, a 3.4% year-over-year increase, and reported 5% daily sales growth—the strongest since Q2 2023. This momentum is critical for a firm that supplies fasteners, tools, and industrial products to construction and manufacturing sectors.
The company also boasts 3,500 locations across 25 countries, leveraging its “high-touch, high-tech” model to serve clients like Walmart and Boeing. This global footprint and steady demand for industrial supplies have made Fastenal a stalwart in its niche.
The Bulls’ Case
Proponents argue the split is a confidence play. Lowering the share price could attract retail investors who might have shied away from a stock trading near $80. Plus, the timing aligns with strong earnings and expansion plans. CEO Jerry Flaws emphasized that the split reflects “confidence in our long-term growth strategy,” including plans to add more locations and digitize supply chains.
The Bears’ Concerns
But not everyone is buying. Analysts at Raymond James note that Fastenal’s stock trades at a P/E ratio of 42, well above its 10-year average of 28. That’s a red flag. Meanwhile, tariff tensions and slowing construction spending could crimp margins. Competitors like MSC Industrial and W.W. Grainger are nipping at Fastenal’s heels, too.
The Bottom Line
So, is this split a green light or a yellow flag? Let’s break it down:
- Growth is real but uneven: While daily sales growth is strong, revenue has only risen 3.4% annually over the last five years. Sustaining that in a slowing economy is a gamble.
- Valuation is stretched: At $46 billion, Fastenal’s market cap is nearly double its 2019 level, even as revenue grew just 25% over the same period.
- The split’s true purpose: Lowering the price might be less about attracting investors and more about resetting the stock’s trajectory after a 13.9% jump in 2025 alone.
Final Verdict: Proceed with Caution
Fastenal’s stock split isn’t a bad move—but it’s not a free pass to buy either. The company has a solid moat in industrial supply, but its valuation demands sustained growth that may not materialize. If you’re in it for the long haul, Fastenal’s dividend yield of 1.2% and geographic diversification offer some comfort. But if you’re chasing momentum, remember: splits don’t fix overvaluation.
Investors should watch two key metrics: daily sales growth trends (to gauge demand) and margins (to see if competition or tariffs are biting). If those stay strong, this split could be a smart reset. If not? Buckle up—$40 a share might feel just as risky as $80.
Remember, the market rewards patience and punishes panic. Do your homework!
