Fastenal Company (FAST) shares tumbled Tuesday after the industrial supplies distributor delivered a quarter that looked pretty good on paper—except for that one number Wall Street really cares about. Revenue came in light, and investors weren't having it.
For the quarter ended December 31, 2025, Fastenal posted double-digit sales growth and managed to expand its operating margin. The company highlighted continued momentum from customer contract signings, which is impressive considering the industrial production environment has been, well, sluggish.
The Numbers Game
Net sales climbed 11.1% year-over-year to $2.03 billion, which sounds great until you realize analysts were expecting $2.044 billion. For the full year, sales increased 8.7% to $8.20 billion.
On the earnings front, fourth-quarter net income jumped 12.2% to $294.1 million, translating to 26 cents per diluted share versus 23 cents a year earlier. That matched consensus, so at least there's that. For all of 2025, net income reached $1,258.4 million, or $1.09 per diluted share, compared with $1,150.6 million, or $1.00 per share, in 2024.
Margin Dynamics Tell a Mixed Story
Gross profit totaled $898.7 million, representing 44.3% of sales—a slight dip from 44.8% the previous year. But here's the interesting part: operating income actually improved to $384.3 million, or 19.0% of sales, up from 18.9% in the prior-year period. So they're managing to squeeze more efficiency out of operations even as gross margins face pressure.
The company credited its sales performance to "the contribution from improved customer contract signings since the first quarter of 2024." Foreign exchange also provided a small tailwind, boosting fourth-quarter sales by roughly 20 basis points.
On the operational side, Fastenal signed 5,966 weighted FASTBin and FASTVend devices in the quarter and 25,892 for the full year, hitting its 2025 target. For 2026, they're aiming for "between 28,000 and 30,000 MEUs."
Operating cash flow came in at $368.1 million for the quarter and $1,295.9 million for the year. The company ended 2025 with $276.8 million in cash and cash equivalents against $125.0 million in total debt.
The Tariff Problem
Here's where things get uncomfortable. The company noted that inventory increased partly because "tariffs and general inflation led to increased inventory valuation." That's not exactly what investors want to hear. Looking ahead, Fastenal forecasts capital investment of $310.0 million to $330.0 million for 2026.
FAST Price Action: Fastenal shares were down 4.82% at $41.63 at the time of publication on Tuesday.
