Berkshire requires a 25–50% discount to intrinsic value before buying.
Buffett Quality Checklist
✓ROE >15% consistently (≥7 of last 10 years)
✓Free cash flow positive (≥8 of last 10 years)
✓Conservative leverage — Debt/Equity below 1
✓Revenue growing at CAGR >5%
✓EPS growing at CAGR >5%
10-Year Financial History — SEC EDGAR 10-K Filings
Year▲
Revenue▲
Net Income▲
FCF▲
Owner Earnings▲
ROE▲
Net Margin▲
LT Debt▲
Cash▲
2016
$4.0B
$499.4M
$330.4M
$413.4M
25.8%
12.6%
$390.0M
$112.7M
2017
$4.4B
$578.6M
$465.3M
$582.3M
27.6%
13.2%
$415.0M
$116.9M
2018
$5.0B
$751.9M
$497.9M
$709.7M
32.7%
15.1%
$500.0M
$167.2M
2019
$5.3B
$790.9M
$596.3M
$689.1M
29.7%
14.8%
$345.0M
$174.9M
2020
$5.6B
$859.1M
$933.7M
$844.3M
31.4%
15.2%
$405.0M
$245.7M
2021
$6.0B
$925.0M
$613.5M
$928.3M
30.4%
15.4%
$390.0M
$236.2M
2022
$7.0B
$1.1B
$767.2M
$1.1B
34.4%
15.6%
$555.0M
$230.1M
2023
$7.3B
$1.2B
$1.3B
$1.2B
34.5%
15.7%
$260.0M
$221.3M
2024
$7.5B
$1.2B
$946.8M
$1.1B
31.8%
15.2%
$200.0M
$255.8M
2025
$8.2B
$1.3B
$1.1B
$1.2B
31.9%
15.3%
$125.0M
$276.8M
Warren & Charlie
Buffett / Munger — quality, moat & valuation
FASTENAL CO (FAST) — Investment Memo
🐂 The Bull Case (Warren's voice)
The "Industrial OS" Moat: This isn't a hardware store; it's a logistics utility. By embedding vending machines and inventory software into the customer's floor, they move from being a vendor to being infrastructure.
High-Velocity Compounding: Revenue has more than doubled from $4.0B to $8.2B since 2016 without relying on the "diworseification" of expensive acquisitions. Organic growth is the purest form of compounding.
Fortress Economics: An ROE of 31.9% achieved without leverage tricks is a rare find. When FCF growth (10.3%) consistently outpaces Net Income growth (9.3%), you aren't betting on accounting—you're betting on cash.
Attractive Range: The business is wonderful, but we don't overpay for wonderful. It becomes a Berkshire-grade acquisition when the price reflects a meaningful discount to its intrinsic value of $23.08.
🐻 The Bear Case (Charlie inverts)
The "Print-Your-Own" Apocalypse: The structural death blow isn't a competitor; it's additive manufacturing. If 3D printing of industrial fasteners becomes cost-effective and precise at the point of use, the entire distribution model—and the vending machine moat—evaporates.
Direct-to-Factory Disintermediation: If manufacturers (the suppliers) leverage AI-driven logistics to ship directly to the factory floor with Fastenal's efficiency, Fastenal becomes a redundant middleman charging a premium for a convenience that no longer exists.
Most Likely Threat: The 3D printing shift. Timeframe: 10–15 years. It is a slow burn that could permanently impair the need for physical inventory hubs.
💰 Valuation & Margin of Safety
Reacting to the DCF estimate of $26.5B total valuation:
Intrinsic value estimate: $23.08 per share
25% margin of safety entry: $17.31(conservative)
50% margin of safety entry: $11.54(Buffett's ideal)
Current Status: Expensive. Based on the provided DCF, the business is trading well above its intrinsic value. We are paying for perfection and beyond.
Verdict: PASS
The moat is a fortress, but the price is a mountain. At an intrinsic value of $23.08, the current market price offers no margin of safety. We will wait for the market to stop pricing this as a tech company and start pricing it as a distributor.
Other Analyst Views· Lynch · Damodaran
Research Notes· Money Model · Moat · Financials · Management
Data sourced from SEC EDGAR XBRL filings (10-K only). For educational purposes — not investment advice.