Fastenal Company (FAST) has been eyeing profitable government projects in order to strengthen its position in local markets. Moreover, the company has undertaken several steps that will simultaneously upgrade its services and reduce costs.

Its hub and spoke model and aggressive store expansion strategy supported by an improving cash flow will also increase customer satisfaction and benefit its business going forward. The company’s profits in the most recent quarter were in line with the Zacks Consensus Estimate of $0.33 per share.

Therefore, we have upgraded our recommendation on the shares of Fastenal from Neutral to Outperform. Our $55 target price, 39.6x our 2012 EPS estimate, reflects this view.

FASTENAL (FAST): Free Stock Analysis Report

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