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Take care with the trailing 12 months of earnings. They are elevated (net margins now around 15%) beyond what it has generally sustained for the same level of sales (net margins around 12%) so I expect there will be some one-off effects in the earnings.

Rather than using 12 months for the margin, one can use a few years as a quick and dirty way to normalise (or if calculating using earnings, then use the average of the last 3 years of earnings). It is better of course to normalise the earnings by understanding why there is a one-off spike or depression in the earnings as it appears with Fastenal. It it might be okay and they can sustain the present margins, but if so then you should have reason to believe why that is so also.

I'm looking at this one from an extreme distance - I haven't even read their reports and don't know much at all about this firm.

- Manlobbi
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