Ferguson PLC (FERG) AI Stock Analysis

• Market Cap: £43.50B
• Dividend Yield: 1.5%
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 27.5
• Beta (1Y): 1.06
• Revenue Growth: 2.32%
• EPS Growth: -12.51%
• Country: US
• Employees: 35,000
• Sector: Industrials
• Sector Strength: 91
• Industry: Industrial - Distribution
• EPS (TTM): 2.50
• Shares Outstanding: 197,181,030
• 10 Day Avg. Volume: 1,370,205
• 30 Day Avg. Volume: 1,664,510
• PEG Ratio: -2.29
• Price to Book (P/B): 3.96
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 19.75
• Enterprise Value/Market Cap: 0.42
• Enterprise Value/Revenue: 0.15
• Enterprise Value/Gross Profit: 2.00
• Enterprise Value/Ebitda: 1.67
• 1Y Price Target: £234.92
• Price Target Upside: 6.49% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 76 Outperform
• Price Target: $241.00 ▲(9.25%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 Growth

Operating profit is expected to rise by 7% for FY25 due to improved margin forecasts.

Financial Performance

The outlook was raised, surprising many, with expectations for higher top-line growth and improved operating margins.

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

Operational Complexity

Restructuring efforts, including severance costs and branch closures, are expected to reduce complexity and speed up decision making and accountability.

Stock 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 Business Overview & Revenue Model

Company Description

Ferguson 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 Money

Ferguson PLC generates revenue through the sale of a comprehensive range of products, including plumbing and heating equipment, to professional contractors and building companies. The company's revenue model is primarily based on direct sales through its extensive distribution network, which includes over 1,400 locations across North America. Ferguson also leverages e-commerce platforms to reach a broader customer base, enhancing convenience and accessibility for its clients. The company benefits from economies of scale, allowing it to offer competitive pricing and maintain strong margins. Additionally, strategic partnerships with leading manufacturers and suppliers enable Ferguson to provide a wide selection of high-quality products, further strengthening its market position and driving sales growth.

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

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

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

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.

Breakdown	TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	30.21B	29.64B	29.73B	28.57B	22.79B	21.82B
Gross Profit	9.20B	9.05B	9.03B	8.76B	6.98B	6.42B
EBITDA	2.29B	2.98B	3.10B	3.12B	2.25B	1.98B
Net Income	1.61B	1.74B	1.89B	2.12B	1.47B	961.00M
Balance Sheet
Total Assets	17.27B	16.57B	15.99B	15.66B	13.48B	13.46B
Cash, Cash Equivalents and Short-Term Investments	519.00M	571.00M	601.00M	771.00M	1.33B	2.12B
Total Debt	5.40B	5.52B	4.84B	5.45B	3.80B	4.52B
Total Liabilities	11.73B	10.96B	10.96B	11.00B	8.68B	9.09B
Stockholders Equity	5.53B	5.62B	5.04B	4.67B	4.81B	4.37B
Cash Flow
Free Cash Flow	1.40B	1.50B	2.28B	859.00M	1.29B	1.57B
Operating Cash Flow	1.75B	1.87B	2.72B	1.15B	1.54B	1.87B
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 Price: 220.59
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 220.59 is above the 20-day moving average (MA) of 218.24, above the 50-day MA of 198.22, and above the 200-day MA of 185.98, indicating a bullish trend. The MACD of 6.81 indicates Positive momentum. The RSI at 65.17 is Neutral, neither overbought nor oversold. The STOCH value of 64.90 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FAST	77 Outperform	$49.64B	43.17	32.57%	4.07%	3.08%	-0.76%
WSO	77 Outperform	$19.05B	36.09	18.91%	2.55%	3.92%	1.09%
FERG	76 Outperform	£43.50B	27.54	29.28%	1.50%	2.32%	-12.51%
CNM	75 Outperform	$12.14B	28.37	25.11%	―	10.80%	0.98%
GWW	74 Outperform	$50.90B	27.05	57.19%	0.85%	3.71%	7.23%
AIT	73 Outperform	$9.67B	25.47	22.23%	0.72%	0.50%	4.48%
Sector *	71 Outperform	¥254.45B	13.41	8.48%	3.03%	6.31%	12.90%

Ferguson PLC Corporate Events

Ferguson PLC Secures New $1.5 Billion Credit Facility

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.