Head-To-Head Comparison: Fastenal (NASDAQ:FAST) versus MRC Global (MRC)

MRC Global (NYSE: MRC) and Fastenal (NASDAQ:FAST) are both industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitabiliy, earnings, dividends, valuation and analyst recommendations.

Risk and Volatility

MRC Global has a beta of 1.61, suggesting that its share price is 61% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Earnings & Valuation

This table compares MRC Global and Fastenal’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MRC Global $3.12 billion 0.49 $45.00 million ($0.97) -16.77
Fastenal $4.13 billion 3.04 $952.46 million $1.82 23.93

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

Dividends

Fastenal pays an annual dividend of $1.28 per share and has a dividend yield of 2.9%. MRC Global does not pay a dividend. Fastenal pays out 70.3% of its earnings in the form of a dividend. MRC Global has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

97.7% of MRC Global shares are owned by institutional investors. Comparatively, 83.1% of Fastenal shares are owned by institutional investors. 6.3% of MRC Global shares are owned by company insiders. Comparatively, 0.6% of Fastenal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares MRC Global and Fastenal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MRC Global -2.21% -2.39% -0.83%
Fastenal 12.71% 26.86% 19.02%

Analyst Ratings

This is a breakdown of recent ratings for MRC Global and Fastenal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MRC Global 0 2 7 0 2.78
Fastenal 0 5 9 1 2.73

MRC Global presently has a consensus price target of $19.88, indicating a potential upside of 22.16%. Fastenal has a consensus price target of $50.80, indicating a potential upside of 16.65%. Given MRC Global’s stronger consensus rating and higher probable upside, research analysts plainly believe MRC Global is more favorable than Fastenal.

Summary

Fastenal beats MRC Global on 10 of the 17 factors compared between the two stocks.

About MRC Global

MRC Global Inc. is an industrial distributor of pipe, valves and fittings and related products and services to the energy industry. The Company’s segments include the U.S., Canada and International. Its U.S. segment includes the United States Eastern Region and Gulf Coast, and the United States Western Region. It provides services, such as product testing, manufacturer assessments, daily deliveries, volume purchasing, inventory and zone store management and warehousing, technical support, training, just-in-time delivery, truck stocking, order consolidation, product tagging and system interfaces customized to customer and supplier specifications for tracking and replenishing inventory, engineering of control packages, and valve inspection and repair. The Company’s principal product types include valves, automation, measurement and instrumentation; carbon steel fittings and flanges; stainless steel and alloy fittings, flanges and pipe; gas products; line pipe, and other.

About Fastenal

Fastenal Company is engaged in wholesale distribution of industrial and construction supplies. The Company is engaged in fastener distribution, and non-fastener maintenance and supply business. As of December 31, 2016, it distributed these supplies through a network of approximately 2,500 stores. Its customers are in the manufacturing and non-residential construction markets. The manufacturing market includes both original equipment manufacturers (OEM) and maintenance, repair, and operations (MRO). The non-residential construction market includes general, electrical, plumbing, sheet metal and road contractors. Other users of its products include farmers, truckers, railroads, oil exploration, production and refinement companies, mining companies, federal, state, and local governmental entities, schools and certain retail trades. Its original product offerings are fasteners and other industrial and construction supplies, many of which are sold under the Fastenal product name.

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