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Fastenal (FAST) is trading lower after reporting its Q3 results this morning, which featured a slight EPS miss, while revenue growth accelerated sequentially to 11.7% to reach $2.13 bln, merely meeting analyst expectations. The industrial products distributor typically meets or modestly exceeds EPS estimates, making this miss just its fourth in the past five years.

• Industrial production remained sluggish, though improved contract signings drove growth; customers spending $10K+ per month rose 8.1%.
• Manufacturing end markets (+12.7%) outperformed on key account gains and its fastener expansion initiative, while other end markets (+8.4%) benefited from non-residential construction, healthcare, and data center customers.
• Fasteners (+14.4%) outpaced non-fasteners (+10.4%) on easier comps, large account growth, and better product availability.
• Price added about 240-270 bps to growth, slightly below expectations; margins expanded 40 bps yr/yr to 45.5%, aided by inventory investments.
• Management said growth came largely from "self-help" efforts and market share gains rather than macro lift, with PMI averaging below 50.

Briefing.com Analyst Insight

FAST's solid Q3 reflected strong execution, with profitability improving and revenue marking its highest growth rate in 12 quarters, but results still fell short of investor expectations. Management noted growth was driven by self-help and contract wins, not broader industrial recovery, which may have dampened investor sentiment. Still, national account momentum and accelerating onsite signings leave FAST well-placed to capitalize when industrial demand finally turns higher.