Ferguson PLC (FERG) AI Stock Analysis

• Market Cap: £32.44B
• Dividend Yield: 2.05%
• Average Volume (3M): 2.30M
• Price to Earnings (P/E): 20.1
• Beta (1Y): 1.03
• Revenue Growth: 1.84%
• EPS Growth: -5.54%
• Country: US
• Employees: 35,000
• Sector: Industrials
• Sector Strength: 65
• Industry: Industrial - Distribution
• EPS (TTM): 8.13
• Shares Outstanding: 198,700,180
• 10 Day Avg. Volume: 2,189,282
• 30 Day Avg. Volume: 2,296,622
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.05
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £192.98
• Price Target Upside: 18.25% 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 Initiatives

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

Ferguson is trading at a significant discount relative to the average of the US peer group, providing an attractive valuation.

Negative Factors

Deflationary Pressures

The company's gross margin decreased due to ongoing deflation and changes in product mix, leading to lower-than-expected margins.

Margins

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.

Market Environment

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

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 primarily through the sale and distribution of plumbing and heating products. The company operates a multi-channel distribution model that includes a vast network of local branches, online platforms, and direct sales teams, enabling it to reach a wide customer base. Revenue streams are bolstered by strategic partnerships with manufacturers and suppliers, allowing Ferguson to offer an extensive catalog of branded and private-label products. Additionally, the company benefits from providing value-added services such as installation and maintenance support, further enhancing its earnings potential.

Ferguson PLC Financial Statement Overview

Summary

Ferguson PLC exhibits strong financial health with robust profitability margins and efficient equity utilization. The balance sheet shows prudent leverage, although the reliance on debt may pose risks in unfavorable market conditions. Cash flows are strong, providing a solid base despite some recent fluctuations. Overall, the company is financially stable but should focus on improving revenue growth and managing debt levels.

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
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
29.90B	29.64B	29.73B	28.57B	22.79B	21.82B
	Gross Profit
8.99B	9.05B	9.03B	8.76B	6.98B	6.42B
	EBIT
2.52B	2.65B	2.66B	2.82B	2.03B	1.42B
	EBITDA
2.87B	2.98B	3.10B	3.12B	2.25B	1.98B
	Net Income Common Stockholders
1.64B	1.74B	1.89B	2.12B	1.47B	961.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
764.00M	571.00M	601.00M	771.00M	1.33B	2.12B
	Total Assets
16.53B	16.57B	15.99B	15.66B	13.48B	13.46B
	Total Debt
6.02B	5.52B	4.84B	5.45B	3.80B	4.52B
	Net Debt
5.26B	4.95B	4.24B	4.68B	2.47B	2.41B
	Total Liabilities
11.04B	10.96B	10.96B	11.00B	8.68B	9.09B
	Stockholders Equity
5.49B	5.62B	5.04B	4.67B	4.81B	4.37B
Cash Flow		Free Cash Flow
1.36B	1.50B	2.28B	859.00M	1.29B	1.57B
	Operating Cash Flow
1.69B	1.87B	2.72B	1.15B	1.54B	1.87B
	Investing Cash Flow
-561.78M	-601.00M	-1.05B	-922.00M	-172.00M	-606.00M
	Financing Cash Flow
-1.00B	-1.31B	-1.81B	-744.00M	-2.08B	-485.00M

Ferguson PLC Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 163.19
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 163.19 is above the 20-day moving average (MA) of 161.34, below the 50-day MA of 166.69, and below the 200-day MA of 187.93, indicating a neutral trend. The MACD of -0.61 indicates Negative momentum. The RSI at 50.37 is Neutral, neither overbought nor oversold. The STOCH value of 74.91 is Neutral, 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	$46.72B	40.62	32.35%	1.96%	3.08%	-0.76%
GWW	76 Outperform	$48.12B	25.64	58.98%	0.82%	4.19%	6.60%
FERG	75 Outperform	£32.44B	20.09	29.63%	2.05%	1.84%	-5.54%
WSO	72 Outperform	$20.81B	38.71	20.39%	2.15%	4.59%	-2.05%
AIT	67 Neutral	$8.52B	22.47	22.70%	0.71%	0.37%	3.52%
Sector *	62 Neutral	$4.16B	11.31	5.46%	215.65%	4.12%	-8.47%

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.