Comparing Valuation And Performance: Fastenal Company (FAST), Abraxas Petroleum Corporation (AXAS)

The shares of Fastenal Company have decreased by more than -8.43% this year alone. The shares recently went down by -1.24% or -$0.63 and now trades at $50.08. The shares of Abraxas Petroleum Corporation (NASDAQ:AXAS), has jumped by 8.54% year to date as of 04/13/2018. The shares currently trade at $2.67 and have been able to report a change of 17.11% over the past one week.

The stock of Fastenal Company and Abraxas Petroleum Corporation were two of the most active stocks on Friday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 15.04% versus 2.00%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that FAST will grow it’s earning at a 15.04% annual rate in the next 5 years. This is in contrast to AXAS which will have a positive growth at a 2.00% annual rate. This means that the higher growth rate of FAST implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. FAST has an EBITDA margin of 22.99%, this implies that the underlying business of AXAS is more profitable. The ROI of FAST is 22.40% while that of AXAS is 11.00%. These figures suggest that FAST ventures generate a higher ROI than that of AXAS.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, FAST’s free cash flow per share is a positive 0.52, while that of AXAS is negative -0.03.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for FAST is 5.50 and that of AXAS is 0.50. This implies that it is easier for FAST to cover its immediate obligations over the next 12 months than AXAS. The debt ratio of FAST is 0.20 compared to 0.83 for AXAS. AXAS can be able to settle its long-term debts and thus is a lower financial risk than FAST.


FAST currently trades at a forward P/E of 18.36, a P/B of 6.86, and a P/S of 3.22 while AXAS trades at a forward P/E of 7.30, a P/B of 4.11, and a P/S of 5.02. This means that looking at the earnings, book values and sales basis, FAST is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of FAST is currently at a -13.77% to its one-year price target of 58.08. Looking at its rival pricing, AXAS is at a -20.54% relative to its price target of 3.36.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), FAST is given a 2.20 while 1.40 placed for AXAS. This means that analysts are more bullish on the outlook for FAST stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for FAST is 8.46 while that of AXAS is just 3.46. This means that analysts are more bullish on the forecast for AXAS stock.


The stock of Abraxas Petroleum Corporation defeats that of Fastenal Company when the two are compared, with AXAS taking 6 out of the total factors that were been considered. AXAS happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, AXAS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AXAS is better on when it is viewed on short interest.

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