tiprankstipranks
Trending News
More News >
Ferguson plc (FERG)
:FERG
Advertisement

Ferguson PLC (FERG) AI Stock Analysis

Compare
249 Followers

Top Page

FERG

Ferguson PLC

(LSE:FERG)

Rating:76Outperform
Price Target:
$241.00
▲(6.96% Upside)
Ferguson PLC's overall stock score reflects its strong financial performance and positive earnings call sentiment, indicating a favorable long-term outlook. The company's strategic initiatives are yielding growth in key areas, although valuation concerns due to a high P/E ratio may limit upside potential. Technical indicators signal bullish momentum, yet caution is advised due to overbought conditions.
Positive Factors
Earnings
The Q3 results offered a nice surprise across organic volumes, prices and margins, suggesting a promising outlook for the year ahead.
Market Position
Ferguson has a compelling multi-year growth opportunity from further consolidating its market position through market share gains and bolt-on acquisitions.
Negative Factors
Complexity Reduction
Restructuring efforts, including severance costs and branch closures, are expected to reduce complexity and speed up decision making and accountability.
Valuation
The recent rally in the share price leaves the stock trading on 24x current-year EPS, limiting the upside potential in the near term.

Ferguson PLC (FERG) vs. SPDR S&P 500 ETF (SPY)

Ferguson PLC Business Overview & Revenue Model

Company DescriptionFerguson plc distributes plumbing and heating products in the United States and Canada. It offers plumbing and heating solutions to customers in the residential, commercial, civil/infrastructure, and industrial end markets. The company also distributes pipes, valves, fittings, plumbing supplies, water heaters, kitchen and bathroom fixtures, and appliances; heating, ventilation, air conditioning, and refrigeration products and supplies; and plumbing parts and supplies, fire sprinkler systems, hangers, struts, and fasteners. In addition, it distributes water meters and automation products, irrigation and drainage products, geosynthetics, and stormwater management products; flanges, general industrial maintenance repair and operations products, high density polyethylene products, and fabrication products; water and wastewater treatment products; and PVF solutions. Further, the company offers services, including consultation, advice and project management, pro pick-up, and delivery services; online tools; quotation, jobsite delivery and logistics, project management, and fabrication services; digitally enhanced estimation, and design services; advanced metering infrastructure services; and supply chain and equipment rental services. The company also sells its products through online channels. It operates a network of 1,679 branches and 11 distribution centers. Ferguson plc was founded in 1887 and is headquartered in Wokingham, the United Kingdom.
How the Company Makes MoneyFerguson PLC generates revenue primarily through the sale of plumbing and heating products to professional contractors, builders, and consumers. The company's revenue streams include direct sales through its branches, online sales via its e-commerce platform, and value-added services such as inventory management and logistics support. Ferguson benefits from economies of scale due to its extensive distribution network and strategic partnerships with manufacturers, which allow it to offer a broad product range and competitive pricing. The company's earnings are also supported by its focus on customer service and its ability to provide customized solutions tailored to the needs of various market segments.

Ferguson PLC Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q3-2025)
|
% Change Since: 33.21%|
Next Earnings Date:Sep 16, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance with significant growth in several key areas, notably in sales, gross margin, and operating profit, along with strategic investments paying off in HVAC and Waterworks. Despite some challenges like the decline in residential trade plumbing revenue and restructuring costs, the company's overall financial health and positive market positioning suggest a favorable outlook.
Q3-2025 Updates
Positive Updates
Strong Sales Growth
Sales of $7.6 billion increased 4.3% over the prior year, driven by organic growth of 5% and acquisition growth of 1% despite fewer sales days and foreign exchange impacts.
Improved Gross Margin
Gross margin improved to 31%, up 130 basis points sequentially, driven by better value capture and moderating deflation.
Operating Profit and Margin Expansion
Operating profit increased 6.1%, with operating margin expanding 20 basis points to 9.4%.
Diluted Earnings Per Share Increase
Diluted earnings per share increased 7.8% over the prior year to $2.50.
Strong Balance Sheet
Net debt to EBITDA ratio of 1.2x, indicating a robust financial position.
Nonresidential End Market Growth
Nonresidential revenue grew approximately 7%, with strong activity in commercial, industrial, and civil infrastructure.
HVAC Growth
HVAC customer group delivered strong growth with a 10% increase in the quarter, driven by investments and dual trade contractor conversions.
Waterworks Growth
Waterworks revenue grew 12%, driven by public works and municipal projects.
Negative Updates
Residential Trade Plumbing Revenue Decline
Residential trade plumbing revenues declined 1%, facing headwinds in new construction and ongoing price deflation.
Commodity Deflation Impact
The Industrial, Fire and Fabrication, and Facility Supply customer groups experienced a combined net sales decline of 1% due to commodity deflation.
Business Restructuring Costs
Incurred a nonrecurring business restructuring charge of $68 million, mainly due to severance costs.
Company Guidance
In Ferguson's third-quarter earnings call, the company reported a 4.3% increase in sales to $7.6 billion, with organic growth contributing 5% and acquisitions adding 1%, despite facing a 1.7% negative impact from fewer sales days and foreign exchange fluctuations. The company achieved a gross margin of 31%, a sequential increase of 130 basis points, driven by actions to capture customer value and mitigate deflationary impacts. Operating profit rose by 6.1%, leading to a 20 basis point expansion in operating margin to 9.4%, while diluted earnings per share increased by 7.8% to $2.50. Ferguson invested $690 million in capital, including completing three acquisitions and returning $417 million to shareholders through share repurchases and dividends. The net debt to EBITDA ratio stood at 1.2x. The company updated its fiscal 2025 guidance, now expecting low to mid-single-digit revenue growth and an operating margin between 8.5% and 9.0%. Ferguson's growth initiatives, particularly in HVAC, Waterworks, and large capital projects, are contributing to market outperformance, despite challenges in residential and nonresidential markets.

Ferguson PLC Financial Statement Overview

Summary
Ferguson PLC exhibits solid financial health with strong profitability and efficient cash generation. Despite some pressures on margins and a slight decrease in free cash flow, the company's balance sheet remains stable with a balanced leverage profile. Continued focus on improving operational efficiencies and cash flow management will be key to sustaining growth and stability.
Income Statement
82
Very Positive
Ferguson PLC demonstrates strong profitability with a consistent gross profit margin of approximately 30% over the TTM. The net profit margin is healthy at 5.32% for the TTM, despite a slight decline from the previous year. Revenue growth has been modest, with a 1.94% increase from the prior annual period. However, there was a slight drop in both EBIT and EBITDA margins, indicating some pressure on operating efficiencies.
Balance Sheet
78
Positive
The company's balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.98, indicating a balanced leverage. The return on equity (ROE) is strong at 29.05% for the TTM, showcasing effective use of equity. However, the equity ratio is moderate at 32.03%, suggesting room for improvement in asset financing through equity.
Cash Flow
75
Positive
Ferguson PLC maintains a robust operating cash flow to net income ratio of 1.09, reflecting efficient cash generation relative to net income. However, the free cash flow has decreased by 6.62% from the previous period, indicating potential challenges in cash management. The free cash flow to net income ratio remains strong at 0.87, underscoring adequate cash flow relative to earnings.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue29.64B29.73B28.57B22.79B19.94B
Gross Profit9.05B9.03B8.76B6.98B5.98B
EBITDA2.98B3.10B3.12B2.25B1.98B
Net Income1.74B1.89B2.12B1.47B961.00M
Balance Sheet
Total Assets16.57B15.99B15.66B13.48B13.46B
Cash, Cash Equivalents and Short-Term Investments571.00M601.00M771.00M1.33B2.12B
Total Debt5.52B5.26B5.13B3.60B4.52B
Total Liabilities10.96B10.96B11.00B8.68B9.09B
Stockholders Equity5.62B5.04B4.67B5.00B4.37B
Cash Flow
Free Cash Flow1.50B2.28B859.00M1.29B1.57B
Operating Cash Flow1.87B2.72B1.15B1.54B1.87B
Investing Cash Flow-601.00M-1.05B-922.00M-172.00M-606.00M
Financing Cash Flow-1.31B-1.81B-744.00M-2.08B-485.00M

Ferguson PLC Technical Analysis

Technical Analysis Sentiment
Positive
Last Price225.31
Price Trends
50DMA
213.70
Positive
100DMA
189.70
Positive
200DMA
188.18
Positive
Market Momentum
MACD
3.12
Positive
RSI
59.22
Neutral
STOCH
49.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FERG, the sentiment is Positive. The current price of 225.31 is above the 20-day moving average (MA) of 222.83, above the 50-day MA of 213.70, and above the 200-day MA of 188.18, indicating a bullish trend. The MACD of 3.12 indicates Positive momentum. The RSI at 59.22 is Neutral, neither overbought nor oversold. The STOCH value of 49.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FERG.

Ferguson PLC Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$52.15B43.9232.57%1.87%4.84%2.98%
76
Outperform
$44.59B28.2329.28%1.48%2.32%-12.51%
75
Outperform
$12.62B29.4625.11%10.80%0.98%
73
Outperform
$10.26B27.0122.23%0.63%0.50%4.48%
69
Neutral
$17.35B32.7918.38%2.62%0.98%
67
Neutral
€3.16B22.136.98%2.64%-1.32%-40.42%
62
Neutral
$44.75B23.6155.30%0.90%4.35%7.84%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FERG
Ferguson PLC
226.16
32.26
16.64%
AIT
Applied Industrial Technologies
269.28
73.89
37.82%
FAST
Fastenal Company
45.44
13.04
40.25%
GWW
WW Grainger
935.63
-28.88
-2.99%
WSO
Watsco
428.25
-32.06
-6.96%
CNM
Core & Main
64.04
14.96
30.48%

Ferguson PLC Corporate Events

Private Placements and Financing
Ferguson PLC Secures New $1.5 Billion Credit Facility
Positive
Apr 3, 2025

On April 2, 2025, Ferguson Enterprises Inc. entered into a new revolving credit agreement with Ferguson UK Holdings Limited and other parties, establishing a $1.5 billion unsecured credit facility maturing in 2030. This agreement allows for potential increases up to an additional $500 million depending on lender commitments and includes various interest rate options and covenants. Concurrently, Ferguson terminated its previous $1.35 billion multicurrency revolving facility, with no outstanding borrowings at the time of termination.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 12, 2025