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Ferguson: 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.

FERG.L

GBp 19210

0.68%

A-Score: 3.9/10

Publication date: February 24, 2026

Full Report

Author: Analystock.ai

📋 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.

Ferguson's A-Score