Ferguson PLC (FERG) AI Stock Analysis

• Market Cap: £34.23B
• Dividend Yield: 1.97%
• Average Volume (3M): 2.01M
• Price to Earnings (P/E): 21.2
• Beta (1Y): 1.01
• Revenue Growth: 1.84%
• EPS Growth: -5.54%
• Country: US
• Employees: 35,000
• Sector: Industrials
• Sector Strength: 79
• Industry: Industrial - Distribution
• EPS (TTM): 8.13
• Shares Outstanding: 198,700,180
• 10 Day Avg. Volume: 1,674,335
• 30 Day Avg. Volume: 2,005,681
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.57
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £192.51
• Price Target Upside: 11.75% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

Ferguson PLC is well-positioned financially with strong profitability and robust cash flow management, earning it a high financial performance score. However, technical analysis suggests a bearish trend, which tempers the overall optimism. Valuation metrics indicate fair pricing with a reasonable dividend yield. The earnings call highlights both opportunities and challenges, while the new credit facility strengthens financial resilience. Overall, Ferguson PLC presents a balanced investment opportunity with stable fundamentals but faces some market and operational challenges.

Positive Factors

Growth Opportunities

FERG's investments have allowed it to take share in HVAC & waterworks and vols have accelerated.

Market Position

FERG is the largest distributor in our coverage, generating ~$30bn in sales across a variety of North American residential and non-residential construction markets.

Valuation

Current stock levels are considered inexpensive, with a mid-teens P/E ratio on FY26 EPS.

Negative Factors

Demand Challenges

Management commentary pointed to a more muted demand environment in both residential and commercial sectors.

Economic Environment

There is a lack of confidence that the negative revision cycle is over and a catalyst to get investors involved near-term, with rates still elevated and risks of a US recession.

Margins Decline

Margins are expected to decline to ~8.5% in FY25, vs. the prior high of 10.3% in FY22, as commodity products deflation and weak demand continue to hinder operating leverage.

Ferguson PLC Business Overview & Revenue Model

Company Description

Ferguson PLC (FERG) is a leading distributor of plumbing and heating products, serving both residential and commercial markets primarily in North America. The company offers a wide array of products including plumbing supplies, HVAC equipment, and building materials, catering to the needs of professional contractors and home improvement specialists. With a strong focus on customer service and a vast network of distribution centers, Ferguson PLC is well-positioned to meet the demands of a diverse clientele in the construction and maintenance sectors.

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 a strong financial position with excellent profitability margins and efficient equity utilization. The balance sheet shows prudent leverage, although there is a reliance on debt which could pose risks if the market environment changes unfavorably. Cash flows remain robust, providing a solid foundation for future growth despite recent fluctuations. Overall, the company is well-positioned with stable financial health, yet it should be mindful of its debt levels and seek to maintain or improve revenue growth.

Income Statement

Ferguson PLC demonstrates robust profitability metrics with a strong Gross Profit Margin of 30.07% and a solid EBIT Margin of 8.44% for TTM. While the Net Profit Margin is healthy at 5.49%, the company has experienced moderate revenue growth, with a TTM revenue growth rate of 0.89%. These figures indicate stable profitability and efficient cost management, though the growth rate suggests a period of stabilizing or slowing top-line growth.

Balance Sheet

The balance sheet of Ferguson PLC reflects a moderate debt-to-equity ratio of 1.10, indicating balanced leverage. The Return on Equity is strong at 29.87%, suggesting efficient use of equity to generate profits. However, the equity ratio of 33.19% indicates that a significant portion of the company's assets is financed through debt, which may present some financial risk in the case of market downturns.

Cash Flow

Ferguson PLC shows strong cash flow performance, with a reasonable Operating Cash Flow to Net Income ratio of 1.03 and a solid Free Cash Flow to Net Income ratio of 0.83. The company also reported a positive Free Cash Flow Growth Rate of -9.63% for TTM, suggesting some volatility in cash flow generation, but overall, the company maintains healthy cash flow management.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
29.64B	29.73B	28.57B	22.79B	21.82B
	Gross Profit
9.05B	9.03B	8.76B	6.98B	6.42B
	EBIT
2.65B	2.66B	2.82B	2.03B	1.42B
	EBITDA
2.98B	3.10B	3.12B	2.25B	1.98B
	Net Income Common Stockholders
1.74B	1.89B	2.12B	1.47B	961.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
571.00M	601.00M	771.00M	1.33B	2.12B
	Total Assets
16.57B	15.99B	15.66B	13.48B	13.46B
	Total Debt
5.52B	4.84B	5.45B	3.80B	4.52B
	Net Debt
4.95B	4.24B	4.68B	2.47B	2.41B
	Total Liabilities
10.96B	10.96B	11.00B	8.68B	9.09B
	Stockholders Equity
5.62B	5.04B	4.67B	4.81B	4.37B
Cash Flow		Free Cash Flow
1.50B	2.28B	859.00M	1.29B	1.57B
	Operating Cash Flow
1.87B	2.72B	1.15B	1.54B	1.87B
	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: Neutral
• Last Price: 172.26
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FERG, the sentiment is Neutral. The current price of 172.26 is above the 20-day moving average (MA) of 164.19, above the 50-day MA of 164.74, and below the 200-day MA of 186.90, indicating a neutral trend. The MACD of 1.93 indicates Negative momentum. The RSI at 60.63 is Neutral, neither overbought nor oversold. The STOCH value of 86.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FERG.

Ferguson PLC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNM	78 Outperform	$9.76B	23.26	26.10%	―	11.03%	-0.85%
FAST	77 Outperform	$47.11B	40.96	32.35%	2.01%	3.08%	-0.76%
GWW	77 Outperform	$51.31B	27.41	57.19%	0.77%	3.71%	7.23%
AIT	75 Outperform	$8.66B	23.03	22.23%	0.69%	0.50%	4.48%
FERG	75 Outperform	£34.23B	21.20	29.63%	1.97%	1.84%	-5.54%
WSO	70 Outperform	$20.81B	38.71	18.91%	2.35%	3.92%	―
Sector *	64 Neutral	$4.28B	11.80	5.33%	250.46%	4.10%	-9.26%

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.