DCF Studio

    FAST · NMS · Industrials

    Fastenal Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 18.62

    Market price

    USD 49.01

    Implied upside

    -62.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 30.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 18.62-62.0%
    Exit multiple
    USD 33.16-32.3%
    Market price
    USD 49.01

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.7bnUSD 9.1bnUSD 9.6bnUSD 10.2bnUSD 10.7bn+5.5%
    EBITUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.2bn+5.5%
    NOPATUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bn+5.5%
    Add depreciation & amortisationUSD 204.5mUSD 215.8mUSD 227.7mUSD 240.2mUSD 253.5m+5.5%
    Less capital expenditureUSD -234.4mUSD -247.3mUSD -260.9mUSD -275.3mUSD -290.5m+5.5%
    Less increase in working capitalUSD -103.7mUSD -109.4mUSD -115.4mUSD -121.8mUSD -128.5m+5.5%
    Free cashflow to firmUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bn+5.5%
    Discount factor0.95610.87400.79890.73030.6675-
    Present valueUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.0bn-3.5%
    Present Value Of The ForecastUSD 5.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.808Reported 0.713, pulled toward 1.0 (Blume)
    Cost of equity9.44%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 56.2bn99.2% of capital
    Total debtUSD 441.9m0.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.40%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 18.62

    74% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.7bn
    Less reinvestment at g/ROIC (7.9% of NOPAT)
    USD -137.6m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    31.7%
    Terminal value, undiscounted
    USD 23.9bn
    Terminal value, discounted
    USD 15.9bn
    Enterprise value
    USD 21.6bn
    Less net debt
    USD 165.1m
    Equity value
    USD 21.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 33.16

    85% of EV

    Terminal value, undiscounted
    USD 49.0bn
    Terminal value, discounted
    USD 32.7bn
    Enterprise value
    USD 38.3bn
    Less net debt
    USD 165.1m
    Equity value
    USD 38.1bn

    Spread between methods: 56%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.40%23.0324.4726.2028.3230.98
    8.40%19.6620.6321.7623.1024.71
    9.40%17.1617.8418.6219.5220.57
    10.40%15.2115.7116.2716.9017.63
    11.40%13.6714.0414.4514.9115.43

    Outlined: this model. Green text: above today's price of 49.01. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year5.5%31.8%+26.3pp
    EBIT margin20.5%52.9%+32.4pp
    Discount rate9.4%5.1%-4.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.