This Industrial Bellwether’s Earnings Show the Manufacturing Economy Is Doing Just Fine

Coming into Wednesday, Fastenal stock has gained 28% this year. (Dreamstime)

Key Points

• Fastenal reports third-quarter earnings of 35 cents a share on sales of $2.5 billion, beating Wall Street expectations.
• Fastenal stock falls in premarket trading on Wednesday.
• Fastenal stock has gained 28% this year, pushing its valuation to about 37 times expected earnings over the next 12 months.

Industrial distributor Fastenal sells hundreds of thousands of products to tens of thousands of customers, giving investors a near-real-time view of the industrial economy and the industrial economy is doing fine.

The company on Wednesday kicked off industrial earnings season with a solid third-quarter report. The company reported earnings per share of 35 cents, up from 29 cents in the third quarter of 2025. Wall Street was looking for 34 cents. Sales were $2.5 billion, up from $2.1 billion a year ago. Wall Street was looking for $2.4 billion.

Average daily sales—a metric tracked by the company and investors—rose 15.5%, an increase from 14.7% growth in the second quarter. Manufacturing sales rose 17% year over year. Operating margins were 21.5%, up almost one percentage point year over year.

Things looked solid. Fastenal stock was down 0.8% in premarket trading at $51, while S&P 500 and Dow Jones Industrial Average futures were up 0.2% and 0.3%, respectively.

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Down on good results might be a surprise, but expectations have been creeping up. Coming into Wednesday Fastenal stock has gained 28% this year and 20% over the past 12 months. Both gains topped the S&P 500’s comparable move.

Investors have been more optimistic about industrial stocks with growth improving. The Institute for Supply Management’s Purchasing Managers Index, or PMI, came in at 54.5 for September. A reading above 50 indicates growth.

September was the ninth consecutive reading above 50. Growth is good. U.S. manufacturing recently emerged from a long recession. Coming into 2026, the PMI index was essentially in contraction territory for more than three years.

Rising expectations have Fastenal stock trading at about 37 times earnings expected over the coming 12 months, up from an average PE ratio of about 32 times over the past few years.

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

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