Financial Survey: Fastenal (FAST) & GrowGeneration (GRWG)

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

Valuation & Earnings

This table compares Fastenal and GrowGeneration’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fastenal $4.39 billion 3.36 $578.60 million $1.93 26.64
GrowGeneration $14.36 million 6.43 -$2.54 million ($0.18) -18.72

Fastenal has higher revenue and earnings than GrowGeneration. GrowGeneration is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fastenal and GrowGeneration’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%
GrowGeneration -19.80% -28.02% -21.03%

Dividends

Fastenal pays an annual dividend of $1.60 per share and has a dividend yield of 3.1%. GrowGeneration does not pay a dividend. 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.

Institutional and Insider Ownership

86.4% of Fastenal shares are held by institutional investors. 0.6% of Fastenal shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Fastenal and GrowGeneration, as reported by MarketBeat.

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

Fastenal currently has a consensus price target of $55.44, indicating a potential upside of 7.85%. Given Fastenal’s higher possible upside, analysts clearly believe Fastenal is more favorable than GrowGeneration.

Summary

Fastenal beats GrowGeneration on 13 of the 15 factors compared between the two stocks.

Fastenal Company Profile

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.

GrowGeneration Company Profile

GrowGeneration Corp., through its subsidiaries, operates retail hydroponic stores. It offers farming soil, hydroponic equipment, lighting, plant nutrients, and various other products. The company serves home growers of organic vegetables and fruits, do-it yourselfers, and growers in the cannabis related markets. As of December 31, 2017, it operated 13 retail hydroponic/gardening stores, including 8 stores located in Colorado, 2 stores in California, 2 stores in Nevada, and 1 store in Washington. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Denver, Colorado.

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