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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on FERG

Ferguson's recent performance was driven by strong Q4 earnings, with operating profits and revenue beating Wall Street expectations. The company reported $8.5 billion in sales, a 6.9% increase from last year, and adjusted EPS of $3.48, up 16.8% from the prior year. Nine new acquisitions and investments in growth areas contributed to the results. A fresh dividend and ongoing buybacks also boosted shareholder value. The company's gross margin expanded 70 basis points to 31.7%, and operating profit rose 14.1% to $925 million.

1.c. Company Highlights

2. Ferguson's Strong Financial Performance and Growth Outlook

Ferguson's revenue reached $31.3 billion for the full year 2025, a 5% increase from the previous year, driven by organic growth of 4.5% and acquisitions. The company's operating profit was $3 billion, up 11.3%, with a 9.6% operating margin. Diluted earnings per share (EPS) rose 13.4% to $10.58, beating analyst estimates. The actual EPS came out at $2.21 relative to estimates at $1.55 in the quarterly report. Cash generation was strong, with $2.2 billion in operating cash flow, allowing for investments in growth areas and a return of $1.6 billion to shareholders via dividends and share repurchases.

Publication Date: Feb -25

📋 Highlights
  • Revenue Growth:: 2025 revenue hit $31.3B, up 5% YoY, driven by 4.5% organic growth and acquisitions.
  • Operating Profit Expansion:: Operating profit rose 11.3% to $3B, with a 9.6% margin, reflecting margin expansion of 210bps over a decade.
  • EPS Growth:: Diluted EPS increased 13.4% to $10.58, supported by strong cash flow and disciplined capital allocation.
  • Nonresidential Market Outperformance:: Commercial/Mechanical revenue up 18%, Waterworks up 13%, and Industrial up 7%.
  • Capital Project Tailwinds:: Large capital projects (TAM $90B) and a $40M+ data center project (with $100M in open orders) highlight long-term growth drivers.

Segment Performance

In the US, residential end markets were challenged, but Ferguson outperformed with flat revenue, while nonresidential end markets grew 11%. The company's customer groups saw varied performance, with Waterworks up 13%, Commercial/Mechanical up 18%, and Ferguson Home up 1%. The company's diversified Waterworks business is expected to be a strong tailwind, particularly in large capital projects.

Growth Outlook and Strategy

For 2026, Ferguson expects markets to be broadly flat, with low to mid-single-digit revenue growth and an operating margin range of 9.4% to 9.8%. The company is well-positioned to capitalize on structural trends, including large capital projects, water infrastructure, climate and comfort, and aging and underbuilt housing. Ferguson's strategy focuses on its core strengths, including scale, local market expertise, and a multi-customer group approach, allowing it to provide end-to-end solutions and exceptional service.

Valuation and Returns

The company's valuation metrics indicate a premium, with a P/E Ratio of 24.77 and P/B Ratio of 8.75. However, the company's strong financial performance and growth outlook justify this premium. The ROIC of 18.64% and ROE of 35.56% demonstrate the company's ability to generate strong returns on capital. The Net Debt / EBITDA ratio of 1.46 indicates a manageable debt burden.

Mergers and Acquisitions

Ferguson has a disciplined approach to capital allocation, prioritizing investments to drive above-market organic growth, bolt-on acquisitions, sustainably growing the dividend, and returning capital to shareholders via share repurchases. The company has moved M&A up the capital allocation hierarchy, reflecting its growth aspirations and focus on returns. The M&A pipeline is healthy, and the company expects 2026 to be a more active year for M&A.

Long-term Growth Targets

The company targets to deliver its next milestone of $40 billion in revenue, with over $4 billion in adjusted operating profit at over a 10% operating margin. The long-term growth target is 6% to 11%, with an expectation to expand operating margins by 10 to 30 basis points per year. Analysts estimate next year's revenue growth at 5.9%, indicating a stable growth trajectory.

3. NewsRoom

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Ferguson Files Form 10-KT

Mar -02

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Wix Stock Down 70% This Past Year as One Fund Discloses $122 Million Exit

Feb -27

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Is Ferguson plc (FERG) Stock Outpacing Its Industrial Products Peers This Year?

Feb -27

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A Look At Ferguson (NYSE:FERG) Valuation After Earnings Growth, 2026 Guidance And Ongoing Shareholder Returns

Feb -26

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Ferguson price target raised to $245 from $244 at Deutsche Bank

Feb -26

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Ferguson Enterprises Inc (FERG) Q2 2026 Earnings Call Highlights: Strong Growth Amidst ...

Feb -24

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Ferguson Q4 Earnings Call Highlights

Feb -24

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Ferguson Reports Strong Calendar 2025 Results and Issues 2026 Guidance

Feb -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Plumbing and Heating Products

Expected Growth: 4.5%

Ferguson plc's Plumbing and Heating Products segment, driven by increasing demand for pipes, valves, and fittings in residential and commercial markets, is expected to grow steadily, fueled by infrastructure development and renovation activities.

7. Detailed Products

Plumbing Fixtures

Ferguson plc offers a wide range of plumbing fixtures, including sinks, toilets, showers, and faucets from top brands.

HVAC Equipment

Ferguson plc provides heating, ventilation, and air conditioning (HVAC) equipment, including furnaces, air conditioners, and heat pumps.

Waterworks Products

Ferguson plc offers a variety of waterworks products, including pipes, valves, and fittings for water and sewage systems.

Industrial PVF Products

Ferguson plc provides industrial pipe, valve, and fitting (PVF) products for industrial applications, including oil and gas, chemical processing, and power generation.

Fire Protection Systems

Ferguson plc offers fire protection systems, including fire suppression systems, fire alarms, and sprinkler systems.

Water Treatment Solutions

Ferguson plc provides water treatment solutions, including water softeners, filtration systems, and purification systems.

8. Ferguson plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Ferguson plc operates in a industry with moderate threat of substitutes. The company's products and services can be substituted with alternative offerings from competitors, but the switching costs are relatively high.

Bargaining Power Of Customers

Ferguson plc's customers have low bargaining power due to the company's strong brand reputation and wide range of products and services offered.

Bargaining Power Of Suppliers

Ferguson plc's suppliers have moderate bargaining power due to the company's large scale of operations and diversified supply chain.

Threat Of New Entrants

The threat of new entrants in Ferguson plc's industry is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in Ferguson plc's industry is high due to the presence of several large competitors and the need to constantly innovate and differentiate products and services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.07%
Debt Cost 4.96%
Equity Weight 48.93%
Equity Cost 10.01%
WACC 7.43%
Leverage 104.39%

11. Quality Control: Ferguson plc passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
ALA

A-Score: 6.8/10

Value: 6.0

Growth: 6.0

Quality: 6.2

Yield: 5.0

Momentum: 9.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Vinci

A-Score: 6.7/10

Value: 6.3

Growth: 6.1

Quality: 4.7

Yield: 6.9

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Samse

A-Score: 5.7/10

Value: 7.9

Growth: 3.9

Quality: 2.4

Yield: 8.8

Momentum: 2.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
BAE Systems

A-Score: 4.9/10

Value: 2.4

Growth: 6.8

Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Saint-Gobain

A-Score: 4.8/10

Value: 4.7

Growth: 5.8

Quality: 4.5

Yield: 4.4

Momentum: 4.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Ferguson

A-Score: 3.9/10

Value: 2.4

Growth: 6.2

Quality: 5.8

Yield: 3.1

Momentum: 0.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

187.4$

Current Price

187.4$

Potential

-0.00%

Expected Cash-Flows