Financial Review: Fastenal (NASDAQ:FAST) versus Localiza Rent a Car (OTCMKTS:LZRFY)

Localiza Rent a Car (OTCMKTS:LZRFY) and Fastenal (NASDAQ:FAST) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitability, dividends and earnings.

Profitability

This table compares Localiza Rent a Car and Fastenal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Localiza Rent a Car	7.43%	13.79%	4.18%
Fastenal	15.45%	34.03%	26.16%

Institutional & Insider Ownership

81.4% of Fastenal shares are held by institutional investors. 0.3% of Fastenal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Localiza Rent a Car pays an annual dividend of $0.36 per share and has a dividend yield of 3.3%. Fastenal pays an annual dividend of $1.04 per share and has a dividend yield of 2.0%. Localiza Rent a Car pays out 60.0% of its earnings in the form of a dividend. Fastenal pays out 88.1% 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 increased its dividend for 26 consecutive years. Localiza Rent a Car is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Localiza Rent a Car and Fastenal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Localiza Rent a Car	1	0	0	0	1.00
Fastenal	2	5	6	0	2.31

Fastenal has a consensus price target of $49.50, indicating a potential downside of 2.46%. Given Fastenal’s stronger consensus rating and higher possible upside, analysts clearly believe Fastenal is more favorable than Localiza Rent a Car.

Valuation & Earnings

This table compares Localiza Rent a Car and Fastenal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Localiza Rent a Car	$7.48 billion	N/A	$335.90 million	$0.60	18.23
Fastenal	$8.20 billion	7.10	$1.26 billion	$1.18	43.01

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

Summary

Fastenal beats Localiza Rent a Car on 13 of the 15 factors compared between the two stocks.

About Localiza Rent a Car

Localiza Rent a Car S.A. engages in car and fleet rental business. The company is also involved in granting franchises; sale of decommissioned and used cars; provision of sundry automotive, and travel and tourism services; and managing claims for insurance companies, as well as provision of tracking and telemetry services. It operates car rental agencies in Brazil, Argentina, Colombia, Ecuador, and Paraguay. The company serves individuals and legal entities. Localiza Rent a Car S.A. was founded in 1973 and is headquartered in Belo Horizonte, Brazil.

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The company’s fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers that 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 pins, 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 customers; non-residential construction market; 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. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.