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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 Q4 Results Driven by Organic Growth and Margin Expansion

Ferguson delivered a robust fourth quarter and fiscal year 2025 results, with net sales increasing 6.9% to $8.5 billion, driven by 5.8% organic growth. Gross margin expanded 70 basis points to 31.7%, and operating profit grew 13.4% to $972 million, resulting in an 11.4% operating margin. Diluted earnings per share increased 16.8% to $3.48, beating estimates of $2.04 with actual EPS coming in at $2.64 for a prior quarter.

Publication Date: Sep -17

📋 Highlights
  • Q4 Net Sales Growth:: Increased 6.9% to $8.5 billion, driven by 5.8% organic growth and margin expansion of 70 basis points.
  • Full-Year Revenue & Earnings:: FY 2025 net sales rose 3.8% to $30.8 billion, with diluted EPS up 2.6% to $9.94 despite flat residential sales.
  • Segment Performance:: HVAC (+8%) and Waterworks (+10%) led growth, while non-residential sales grew 7% due to complex project partnerships.
  • Margin Normalization:: Q4 gross margin reached 31.7%, but forward guidance projects stabilization in the 30-31% range due to inventory profit gains reversing.
  • Strategic Shift & Guidance:: Fiscal year-end moved to December 31 for operational focus, with 2025 guidance targeting mid-single-digit revenue growth and 9.2–9.6% operating margins.

Segment Performance

The company's growth areas, including HVAC, Waterworks, and Large Capital Projects, drove the strong performance. HVAC revenue grew 8%, driven by organic growth and acquisitions, while Waterworks revenue increased 10% due to diversification efforts. Non-residential sales grew 7% in Q4, while residential sales were flat.

Margin Expectations

Gross margins are expected to normalize in the range of 30% to 31% going forward, after reaching 31.7% in Q4. The company anticipates a slight decline in operating margin in the second half of the year due to seasonality. As Kevin Murphy, CEO, noted, "We are pleased to report strong Q4 results, exceeding our expectations and resulting in a full year of 3.8% growth."

Outlook and Valuation

Ferguson expects mid-single-digit revenue growth for the full year 2025, with an operating margin range of 9.2% to 9.6%. The company's valuation metrics, including a P/E Ratio of 24.31, P/B Ratio of 7.74, and EV/EBITDA of 21.12, indicate a premium valuation. However, with a ROIC of 20.22% and ROE of 32.99%, Ferguson's profitability metrics justify the premium.

Growth Prospects

Despite economic headwinds, Ferguson remains optimistic about growth opportunities in HVAC, Waterworks, and the higher-end residential remodel market. The company's focus on efficiency, scale, and strategic acquisitions will help mitigate cost pressures. With a healthy M&A pipeline, Ferguson is poised to capitalize on future opportunities.

3. NewsRoom

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Ply Raises $8.5M in Strategic Funding Led by Ferguson to Advance Automated Inventory Replenishment

Dec -04

Source:

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Ferguson Enterprises Insiders Sold US$6.9m Of Shares Suggesting Hesitancy

Dec -04

Source:

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IDEX Stock Exhibits Strong Prospects Despite Persisting Headwinds

Nov -28

Source: zacks.com

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Is Ferguson Enterprises Inc.'s (NYSE:FERG) Latest Stock Performance Being Led By Its Strong Fundamentals?

Nov -28

Source:

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GE Aerospace to Pump in $53M to Upgrade West Jefferson Facility

Nov -25

Source: zacks.com

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Illinois Tool Gains From Business Strength Amid Persisting Headwinds

Nov -21

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Ferguson Enterprises (FERG): Assessing Valuation Potential Following Recent Share Performance

Nov -20

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Cimpress Exhibits Strong Prospects Despite Persisting Headwinds

Nov -20

Source: zacks.com

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: 6.7/10

Value: 6.0

Growth: 6.0

Quality: 6.2

Yield: 5.0

Momentum: 9.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Vinci

A-Score: 6.6/10

Value: 6.3

Growth: 6.2

Quality: 4.6

Yield: 6.9

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
BAE Systems

A-Score: 5.7/10

Value: 2.4

Growth: 6.9

Quality: 4.8

Yield: 4.4

Momentum: 9.5

Volatility: 6.3

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: 9.4

Momentum: 1.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Saint-Gobain

A-Score: 5.2/10

Value: 4.8

Growth: 5.8

Quality: 4.3

Yield: 4.4

Momentum: 6.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Ferguson

A-Score: 3.9/10

Value: 2.2

Growth: 6.3

Quality: 5.9

Yield: 3.8

Momentum: 0.0

Volatility: 5.3

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

187.0$

Current Price

187.0$

Potential

-0.00%

Expected Cash-Flows