Head to Head Analysis: Fastenal (FAST) vs. Ferguson (FERGD)

Fastenal (NASDAQ:FAST) and Ferguson (OTCMKTS:FERGD) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Dividends

Fastenal pays an annual dividend of $1.60 per share and has a dividend yield of 2.9%. Ferguson pays an annual dividend of $0.10 per share and has a dividend yield of 1.2%. Fastenal pays out 82.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fastenal has raised its dividend for 7 consecutive years. Fastenal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Fastenal and Ferguson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fastenal 15.25% 32.29% 23.25%
Ferguson N/A N/A N/A

Analyst Recommendations

This is a summary of recent ratings for Fastenal and Ferguson, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fastenal 2 5 4 0 2.18
Ferguson 0 0 0 0 N/A

Fastenal presently has a consensus target price of $55.44, suggesting a potential upside of 1.70%. Given Fastenal’s higher probable upside, analysts plainly believe Fastenal is more favorable than Ferguson.

Insider & Institutional Ownership

86.3% of Fastenal shares are held by institutional investors. Comparatively, 0.2% of Ferguson shares are held by institutional investors. 0.6% of Fastenal shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Fastenal and Ferguson’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fastenal $4.39 billion 3.56 $578.60 million $1.93 28.25
Ferguson N/A N/A N/A N/A N/A

Fastenal has higher revenue and earnings than Ferguson.

Summary

Fastenal beats Ferguson on 10 of the 11 factors compared between the two stocks.

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. It offers fasteners, and other industrial and construction supplies under the Fastenal name. The company's fastener products include threaded fasteners, such as bolts, nuts, screws, studs, and related washers, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations; and non-residential construction market, which includes general, electrical, plumbing, sheet metal, and road contractors. It also serves farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. As of December 31, 2017, the company distributed its products through a network of 2,383 company owned stores. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

About Ferguson

Ferguson plc distributes plumbing and heating products in the United States, the United Kingdom, Canada, and Central Europe. It offers plumbing and heating solutions to customers in the residential, municipal, and commercial sectors for repair, maintenance, and improvement (RMI), as well as new construction markets. The company also distributes pipes, valves, fittings, hydrants, meters, and related water management products, as well as offers related services, such as water line tapping and pipe fusion services. In addition, it distributes heating, ventilation, air conditioning, and refrigeration equipment to specialist contractors primarily in the residential and commercial markets for repair and replacement; and PVF products to industrial customers. Further, the company fabricates and supplies fire protection systems primarily to commercial contractors for new construction projects, as well as offers products, services, and solutions to enable maintenance of facilities across various RMI markets. Additionally, it offers supply chain management solutions for PVF and maintenance, repair, and operations. The company sells its home improvement products directly to consumers, as well as through a network of online stores. It operates its B2B business primarily under the Ferguson brand; and B2C business under the Build.com brand. The company provides products and services for maintenance of multi-family properties, government agencies, hospitality, education, healthcare, and other facilities. It operates a network of 2,310 branches and 22 distribution centers. The company was formerly known as Wolseley plc and changed its name to Ferguson plc in July 2017. Ferguson plc was founded in 1887 and is headquartered in Zug, Switzerland.

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