Fastenal (NASDAQ:FAST) and MSC Industrial Direct (NYSE:MSM) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.
Earnings & Valuation
This table compares Fastenal and MSC Industrial Direct's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Fastenal | $5.33 billion | 5.21 | $790.90 million | $1.38 | 35.05 |
MSC Industrial Direct | $3.19 billion | 1.55 | $251.76 million | $4.74 | 18.68 |
Fastenal has higher revenue and earnings than MSC Industrial Direct. MSC Industrial Direct is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
77.1% of Fastenal shares are held by institutional investors. Comparatively, 72.2% of MSC Industrial Direct shares are held by institutional investors. 0.6% of Fastenal shares are held by insiders. Comparatively, 28.4% of MSC Industrial Direct shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of recent recommendations for Fastenal and MSC Industrial Direct, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Fastenal | 1 | 6 | 3 | 0 | 2.20 |
MSC Industrial Direct | 0 | 5 | 2 | 0 | 2.29 |
Fastenal currently has a consensus target price of $44.7778, suggesting a potential downside of 7.43%. MSC Industrial Direct has a consensus target price of $82.00, suggesting a potential downside of 7.37%. Given MSC Industrial Direct's stronger consensus rating and higher probable upside, analysts clearly believe MSC Industrial Direct is more favorable than Fastenal.
Volatility and Risk
Fastenal has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, MSC Industrial Direct has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.
Dividends
Fastenal pays an annual dividend of $1.12 per share and has a dividend yield of 2.3%. MSC Industrial Direct pays an annual dividend of $3.00 per share and has a dividend yield of 3.4%. Fastenal pays out 81.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MSC Industrial Direct pays out 63.3% of its earnings in the form of a dividend. Fastenal has increased its dividend for 1 consecutive years and MSC Industrial Direct has increased its dividend for 1 consecutive years. MSC Industrial Direct is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Fastenal and MSC Industrial Direct's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Fastenal | 15.12% | 30.63% | 21.14% |
MSC Industrial Direct | 7.14% | 20.42% | 10.49% |
Summary
Fastenal beats MSC Industrial Direct on 10 of the 16 factors compared between the two stocks.