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Ferguson PLC (FERG)
NYSE:FERG
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Ferguson PLC (FERG) AI Stock Analysis

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FERG

Ferguson PLC

(NYSE:FERG)

Rating:76Outperform
Price Target:
$241.00
▲(3.03% 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
Financial Performance
Operating profit is expected to rise by 7% for FY25 due to improved margin forecasts.
Market Position
Ferguson has a compelling multi-year growth opportunity from further consolidating its market position through market share gains and bolt-on acquisitions.
Strategic Initiatives
Creating an omnichannel experience by combining showroom and Build.com into Ferguson Home will enhance stickiness and share gain.
Negative Factors
Restructuring Challenges
Restructuring efforts, including severance costs and branch closures, are expected to reduce complexity and speed up decision making and accountability.
Valuation Concerns
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: |
Next Earnings Date:Sep 16, 2025
Earnings Call Sentiment Positive
Ferguson reported strong revenue and profit growth with significant improvements in gross margin and shareholder returns. The company updated its fiscal guidance positively, highlighting growth in key areas like HVAC and Waterworks. However, challenges remain in residential plumbing and the Canadian market, along with ongoing commodity deflation pressures.
Q3-2025 Updates
Positive Updates
Strong Revenue Growth
Sales increased by 4.3% year-over-year to $7.6 billion, with organic growth of 5% and acquisition growth of 1%.
Gross Margin Improvement
Gross margin increased to 31%, up by 130 basis points sequentially and 50 basis points year-over-year.
Operating Profit and Margin Expansion
Operating profit increased by 6.1%, with operating margin expanding by 20 basis points to 9.4%.
HVAC and Waterworks Growth
HVAC sales grew by 10%, and Waterworks revenue increased by 12% due to strong public works and municipal activity.
Shareholder Returns
The company returned $417 million to shareholders through share repurchases and dividends.
Updated Fiscal Guidance
Full year guidance was updated to expect low to mid-single-digit revenue growth and operating margin of 8.5% to 9.0%.
Negative Updates
Residential Plumbing Revenue Decline
Residential trade plumbing revenues declined by 1% due to continued headwinds in new construction and ongoing price deflation.
Commodity Deflation Impact
The company faced mid-single-digit deflation in its commodity basket, impacting the Fire and Fabrication business.
Nonrecurring Restructuring Charge
A nonrecurring restructuring charge of $68 million was incurred, related to severance and branch closures.
Challenges in Canadian Market
Net sales in Canada were 0.3% below last year, with residential activity remaining soft.
Company Guidance
In the third quarter of fiscal year 2025, Ferguson reported strong financial performance with net sales of $7.6 billion, a 4.3% increase from the previous year, driven by 5% organic growth and 1% growth from acquisitions. The company achieved a 31% gross margin, up 130 basis points sequentially, and an operating profit increase of 6.1%, leading to an expanded operating margin of 9.4%. Diluted earnings per share rose by 7.8% to $2.50. Ferguson also executed significant capital deployment, including $690 million in investments, with $417 million returned to shareholders through share repurchases and dividends. The balance sheet remained strong with a net debt to EBITDA ratio of 1.2x. Looking forward, Ferguson updated its guidance for fiscal 2025, anticipating low to mid-single-digit revenue growth and an operating margin between 8.5% and 9.0%, demonstrating confidence in continued market outperformance and strategic investments.

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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue30.21B29.64B29.73B28.57B22.79B19.94B
Gross Profit9.20B9.05B9.03B8.76B6.98B5.98B
EBITDA2.86B2.98B2.97B3.12B2.26B1.65B
Net Income1.61B1.74B1.89B2.12B1.47B961.00M
Balance Sheet
Total Assets17.27B16.57B15.99B15.66B13.48B13.46B
Cash, Cash Equivalents and Short-Term Investments519.00M571.00M601.00M771.00M1.33B2.12B
Total Debt5.83B5.52B5.26B5.13B3.60B4.52B
Total Liabilities11.73B10.96B10.96B11.00B8.68B9.09B
Stockholders Equity5.53B5.62B5.04B4.67B5.00B4.37B
Cash Flow
Free Cash Flow1.40B1.50B2.28B859.00M1.29B1.57B
Operating Cash Flow1.75B1.87B2.72B1.15B1.54B1.87B
Investing Cash Flow-651.73M-601.00M-1.05B-922.00M-172.00M-606.00M
Financing Cash Flow-1.30B-1.31B-1.81B-744.00M-2.08B-485.00M

Ferguson PLC Technical Analysis

Technical Analysis Sentiment
Positive
Last Price233.92
Price Trends
50DMA
223.27
Positive
100DMA
200.54
Positive
200DMA
190.78
Positive
Market Momentum
MACD
3.26
Negative
RSI
63.37
Neutral
STOCH
61.02
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 233.92 is above the 20-day moving average (MA) of 227.75, above the 50-day MA of 223.27, and above the 200-day MA of 190.78, indicating a bullish trend. The MACD of 3.26 indicates Negative momentum. The RSI at 63.37 is Neutral, neither overbought nor oversold. The STOCH value of 61.02 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 (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$10.92B17.4013.78%0.76%1.30%-1.09%
76
Outperform
£46.12B29.0229.28%1.40%2.32%-12.51%
76
Outperform
$57.34B48.5832.57%1.70%4.84%2.98%
76
Outperform
$12.80B30.1125.11%10.80%0.98%
75
Outperform
$48.40B25.5755.30%0.85%4.35%7.84%
69
Neutral
$16.57B31.2418.38%2.79%0.98%0.80%
64
Neutral
$10.95B16.108.81%1.99%2.59%-16.41%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FERG
Ferguson PLC
233.92
34.13
17.08%
FAST
Fastenal Company
49.96
16.96
51.39%
GWW
WW Grainger
1,011.96
51.60
5.37%
WSO
Watsco
407.04
-54.63
-11.83%
WCC
Wesco International
226.49
64.45
39.77%
CNM
Core & Main
64.95
15.38
31.03%

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