Ferguson Enterprises Inc. /DE/ (FERG) Stock Analysis and Metrics

Ferguson Enterprises

NYSE: FERG

$246.73 ▲ +1.55 (+0.63%)

At close: Aug 13, 2026 · 1:58 PM UTC

Financial Ratios

Market Cap47.94 Bn

P/E23.63

P/S1.53

Div. Yield0.01

ROIC (Qtr)0.03

Total Debt (Qtr)4.13 Bn

Revenue Growth (1y) (Qtr)3.59

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About

Ferguson Enterprises Inc. is the largest value added distributor serving water and air specialized professionals in the $340 billion residential and non residential North American construction market. The company provides expertise and a broad range of products and services spanning plumbing, heating, ventilation and air conditioning (HVAC), appliances, lighting, pipes, valves and fittings (PVF), water and wastewater solutions, and related offerings. It sells these through an integrated network of distribution centers, branches, counter service locations, expert sales associates, showroom consultants, and ecommerce channels. Although Ferguson historically operated in Europe, it has focused its operations on the United States and Canada after divesting its European businesses in the early 2000s.

Ferguson generates revenue primarily by selling products and delivering value added services to residential and non residential customers in the construction and maintenance sectors. Its product portfolio includes plumbing supplies, HVAC equipment, appliances, lighting fixtures, PVF components, and water and wastewater treatment solutions. Revenue is also derived from services such as virtual design, fabrication, valve actuation, pre assembly, kitting, installation, project management, and after sales support including warranty, maintenance, repair, and operations (MRO). Residential and non residential markets each contribute roughly half of net sales, with repair, maintenance and improvement (RMI) accounting for about two thirds of sales and new construction for the remaining one third.

Ferguson holds a leading position as one of the top distributors in most of the end markets it serves, including residential, commercial, civil infrastructure, and industrial sectors. The North American distribution market is highly fragmented, with few large competitors and numerous small local and mid size regional distributors. The company’s competitive advantages stem from its extensive scale, encompassing approximately 37,000 suppliers, a network of 1,746 branches, 11 regional distribution centers, six market distribution centers, and about 35,000 associates that enable same day or next day product availability. This scale allows Ferguson to offer a broad product assortment and value added solutions that many smaller competitors cannot match.

Ferguson serves a diverse customer base consisting of residential contractors, commercial builders, infrastructure firms, and industrial clients. Its customers rely on the company for products and expertise needed throughout the life cycle of construction, repair, and maintenance projects. No single account represented more than 1% of net sales in fiscal 2025, indicating a broadly diversified customer mix.

Investment Thesis

▲ Bull case

The structural strength of large capital projects represents a significantly underappreciated multi-year growth driver that extends beyond cyclical trends. Management specifically highlighted accelerating data center construction activity without pauses or cancellations across multiple geographies, alongside strength in biotechnology/pharma, large-scale hospital work, and water/wastewater treatment plant projects. These projects leverage Ferguson's unique multi-customer group approach to deliver integrated solutions spanning underground waterworks, commercial/industrial PVF, and fire protection - creating higher-margin, complex project opportunities that are less sensitive to residential market fluctuations. The company's scale advantages in serving these fragmented markets provide enduring competitive benefits that aren't fully reflected in current growth rates, particularly as onshoring initiatives and infrastructure spending continue to drive demand for these complex projects.
Ferguson's dual trade counter strategy is creating substantial competitive advantages and customer stickiness that the market is underestimating, with over 600 conversions completed (nearing the 650 goal) positioning the company to serve approximately 65,000 dual trade contractors. This initiative directly addresses the growing trend of contractors specializing in both HVAC and plumbing, allowing Ferguson to increase share of wallet and build deeper relationships with these valuable professionals. The strategy is supported by geographic expansion of the HVAC network and strategic acquisitions like Manufactured Duct & Supply Company, creating a self-reinforcing cycle where more counter conversions attract more dual trade contractors, which in turn drives further conversion opportunities. This structural advantage in serving an evolving contractor base represents a sustainable growth catalyst that isn't fully captured in the modest HVAC revenue growth rates reported to date.
Ferguson Home's resilience demonstrates meaningful downside protection against residential market weakness that the market isn't fully valuing, achieving 3% revenue growth in Q4 FY25 and only a 1% decline in Q1 2026 despite broader residential challenges. This performance stems from the business model's focus on the higher-end remodel market serving specialized professional customers through a unified brand combining residential building/remodel and residential digital commerce channels. The network of dedicated outside sales and showroom consultants providing personalized service to builders, designers, and trade professionals creates a differentiated value proposition that holds up better than mass-market residential offerings during downturns. This buffer is particularly valuable given the persistent weaknesses in new residential construction and RMI markets, providing stability that allows Ferguson to continue investing in long-term growth initiatives while navigating near-term headwinds.
The company's acquisition pipeline represents a significant but underappreciated source of future growth, with Carrier Great Lakes acquired post-Q1 2026 and three additional definitive agreements signed (Dealers Supply Company, New England Applied Products, PRD Technologies Group) representing approximately $350 million in aggregate annualized revenue impact. This disciplined approach to tuck-in acquisitions focused on HVAC, Waterworks, and Industrial segments aligns with Ferguson's strategy of consolidating fragmented markets while adding complementary capabilities. Management's consistent execution on acquisitions - completing nine during FY25 with a healthy pipeline continuing - demonstrates effective capital deployment that should drive above-market organic growth over time. The market appears to be focusing on near-term cyclical headwinds while underestimating the cumulative impact of these strategic, value-accretive tuck-in acquisitions on long-term growth prospects.
The alliance with Contractor Commerce represents a hidden digital transformation catalyst that management didn't emphasize in the earnings call but could significantly enhance contractor loyalty and share of wallet. This partnership enables contractors to turn their websites into revenue-generating, AI-discoverable sales channels offering modern self-service buying experiences for quotes, bookings, equipment purchases, and membership enrollments. By making contractor websites more discoverable through AI-powered search optimization as homeowners increasingly use AI-driven tools to evaluate service providers, this initiative addresses a critical evolving need in the contractor ecosystem. The potential to increase contractor engagement, improve online visibility, and create new recurring revenue streams through website-based sales represents a structural advantage that could deepen relationships with Ferguson's professional customer base beyond traditional product distribution, yet this initiative hasn't been highlighted as a near-term growth driver in management's commentary.

The structural strength of large capital projects represents a significantly underappreciated multi-year growth driver that extends beyond cyclical trends. Management specifically highlighted accelerating data center construction activity without pauses or cancellations across multiple geographies, alongside strength in biotechnology/pharma, large-scale hospital work, and water/wastewater treatment plant projects. These projects leverage Ferguson's unique multi-customer group approach to deliver integrated solutions spanning underground waterworks, commercial/industrial PVF, and fire protection - creating higher-margin, complex project opportunities that are less sensitive to residential market fluctuations. The company's scale advantages in serving these fragmented markets provide enduring competitive benefits that aren't fully reflected in current growth rates, particularly as onshoring initiatives and infrastructure spending continue to drive demand for these complex projects.
Ferguson's dual trade counter strategy is creating substantial competitive advantages and customer stickiness that the market is underestimating, with over 600 conversions completed (nearing the 650 goal) positioning the company to serve approximately 65,000 dual trade contractors. This initiative directly addresses the growing trend of contractors specializing in both HVAC and plumbing, allowing Ferguson to increase share of wallet and build deeper relationships with these valuable professionals. The strategy is supported by geographic expansion of the HVAC network and strategic acquisitions like Manufactured Duct & Supply Company, creating a self-reinforcing cycle where more counter conversions attract more dual trade contractors, which in turn drives further conversion opportunities. This structural advantage in serving an evolving contractor base represents a sustainable growth catalyst that isn't fully captured in the modest HVAC revenue growth rates reported to date.
Ferguson Home's resilience demonstrates meaningful downside protection against residential market weakness that the market isn't fully valuing, achieving 3% revenue growth in Q4 FY25 and only a 1% decline in Q1 2026 despite broader residential challenges. This performance stems from the business model's focus on the higher-end remodel market serving specialized professional customers through a unified brand combining residential building/remodel and residential digital commerce channels. The network of dedicated outside sales and showroom consultants providing personalized service to builders, designers, and trade professionals creates a differentiated value proposition that holds up better than mass-market residential offerings during downturns. This buffer is particularly valuable given the persistent weaknesses in new residential construction and RMI markets, providing stability that allows Ferguson to continue investing in long-term growth initiatives while navigating near-term headwinds.
The company's acquisition pipeline represents a significant but underappreciated source of future growth, with Carrier Great Lakes acquired post-Q1 2026 and three additional definitive agreements signed (Dealers Supply Company, New England Applied Products, PRD Technologies Group) representing approximately $350 million in aggregate annualized revenue impact. This disciplined approach to tuck-in acquisitions focused on HVAC, Waterworks, and Industrial segments aligns with Ferguson's strategy of consolidating fragmented markets while adding complementary capabilities. Management's consistent execution on acquisitions - completing nine during FY25 with a healthy pipeline continuing - demonstrates effective capital deployment that should drive above-market organic growth over time. The market appears to be focusing on near-term cyclical headwinds while underestimating the cumulative impact of these strategic, value-accretive tuck-in acquisitions on long-term growth prospects.
The alliance with Contractor Commerce represents a hidden digital transformation catalyst that management didn't emphasize in the earnings call but could significantly enhance contractor loyalty and share of wallet. This partnership enables contractors to turn their websites into revenue-generating, AI-discoverable sales channels offering modern self-service buying experiences for quotes, bookings, equipment purchases, and membership enrollments. By making contractor websites more discoverable through AI-powered search optimization as homeowners increasingly use AI-driven tools to evaluate service providers, this initiative addresses a critical evolving need in the contractor ecosystem. The potential to increase contractor engagement, improve online visibility, and create new recurring revenue streams through website-based sales represents a structural advantage that could deepen relationships with Ferguson's professional customer base beyond traditional product distribution, yet this initiative hasn't been highlighted as a near-term growth driver in management's commentary.

▼ Bear case

Management's own guidance suggests near-term growth momentum may be overestimated by the market, with explicit expectations for "sub-5%" growth in the second half of 2026 compared to 5% growth in the first half, indicating a meaningful sequential slowdown that isn't fully reflected in current expectations. This view is reinforced by multiple references to softer H2 growth driven by persistent weaknesses in new residential construction, continued softness in RMI/repair markets, and affordability pressures affecting HVAC demand. Bill Brundage specifically noted that HVAC was down a touch in August (still low single digits) and acknowledged they're "coming up against some pretty tough comparables in HVAC, start to lap some double-digit comparables," suggesting near-term comparisons will become increasingly challenging. The market appears to be discounting management's cautious outlook and may be expecting stronger sequential improvement than what the company itself is projecting, setting up for potential disappointment if H2 2026 results align with the guided sub-5% growth trajectory.
The significant uncertainty surrounding residential Waterworks backlog conversion represents a material near-term risk that the market is overlooking, highlighted by management's candid admission that "we have no idea how that work will be released" regarding new residential subdivision projects. This uncertainty stems from unclear timing, phasing, and sectioning of work release in residential developments, creating unpredictability in converting backlog to actual revenue despite healthy bidding activity. While management noted they haven't seen a significant fall-off in residential bidding activity, the inability to predict when or if approved work will transition to billable projects introduces substantial volatility to near-term Waterworks performance. This structural uncertainty in the residential new construction pipeline - distinct from general market softness - represents a specific risk factor that could cause Waterworks revenue to underperform expectations even if broader housing indicators stabilize, yet this issue hasn't been quantified or widely discussed in market expectations.
Persistent deflation in PVC continues to create a significant headwind for both residential trade plumbing and Waterworks segments, with management consistently identifying this as an ongoing challenge across multiple quarters and noting it remains in deflation with no clear timeline for resolution. This commodity-specific pressure directly impacts margins and volumes in core residential categories, as evidenced by the 2% decline in residential trade plumbing revenue in Q4 FY25 attributed partly to "ongoing PVC price deflation." The deflation creates a dual challenge: it pressures pricing power in these categories while simultaneously suggesting weaker underlying demand, as falling commodity prices often reflect reduced construction activity. Unlike temporary fluctuations, this persistent PVC deflation represents an ongoing structural headwind that continues to weigh on specific product lines, yet the market may be underestimating its durability and the duration of its impact on Ferguson's residential-related revenue streams.
The HVAC segment faces multiple compounding headwinds that management acknowledged would cause near-term softness, yet the market may be underestimating the combined impact of these factors on growth prospects. These include: persistent weakness in new residential construction (explicitly cited as a pressure point), ongoing consumer affordability concerns driving a shift from replace to repair (which generates significantly less revenue), lapping tough comparables from prior double-digit growth periods, and geographic bifurcation with weak performance in the Western United States. Bill Brundage specifically noted HVAC was down in August and expects "some softness in the near-term on HVAC" embedded in the guidance, while Kevin Murphy described the quarter's performance as "the tale of 2 geographies" with strong East Coast/Midwest performance contrasting with weak Western US sell-through. The structural shift from replace to repair alone represents a fundamental change that limits growth potential, yet this dynamic appears to be insufficiently factored into near-term HVAC growth expectations despite management's repeated references to this trend.
Recent margin strength contains significant temporary elements that the market may be misinterpreting as sustainable improvement, with management explicitly stating they expect gross margins to settle back into the 30%-31% normalized range as temporary supplier price benefits roll off. Bill Brundage was clear that the Q4 FY25 gross margin expansion (31.7%, up 70 bps) included benefits from "the timing and extent of supplier price increases" that would normalize going forward, noting they "started to see that normalization play through" in August gross margins. The Q1 2026 gross margin of 31.0% (up 30 bps) still reflects some residual benefit, but the company's own guidance for 2026 adjusted operating margin of 9.4%-9.8% implies only modest margin expansion from the 9.2% FY25 level. This suggests the market may be overestimating the sustainability of recent margin strength and underestimating the likelihood of mean reversion toward the lower end of the company's historical margin range as temporary factors dissipate.

Management's own guidance suggests near-term growth momentum may be overestimated by the market, with explicit expectations for "sub-5%" growth in the second half of 2026 compared to 5% growth in the first half, indicating a meaningful sequential slowdown that isn't fully reflected in current expectations. This view is reinforced by multiple references to softer H2 growth driven by persistent weaknesses in new residential construction, continued softness in RMI/repair markets, and affordability pressures affecting HVAC demand. Bill Brundage specifically noted that HVAC was down a touch in August (still low single digits) and acknowledged they're "coming up against some pretty tough comparables in HVAC, start to lap some double-digit comparables," suggesting near-term comparisons will become increasingly challenging. The market appears to be discounting management's cautious outlook and may be expecting stronger sequential improvement than what the company itself is projecting, setting up for potential disappointment if H2 2026 results align with the guided sub-5% growth trajectory.
The significant uncertainty surrounding residential Waterworks backlog conversion represents a material near-term risk that the market is overlooking, highlighted by management's candid admission that "we have no idea how that work will be released" regarding new residential subdivision projects. This uncertainty stems from unclear timing, phasing, and sectioning of work release in residential developments, creating unpredictability in converting backlog to actual revenue despite healthy bidding activity. While management noted they haven't seen a significant fall-off in residential bidding activity, the inability to predict when or if approved work will transition to billable projects introduces substantial volatility to near-term Waterworks performance. This structural uncertainty in the residential new construction pipeline - distinct from general market softness - represents a specific risk factor that could cause Waterworks revenue to underperform expectations even if broader housing indicators stabilize, yet this issue hasn't been quantified or widely discussed in market expectations.
Persistent deflation in PVC continues to create a significant headwind for both residential trade plumbing and Waterworks segments, with management consistently identifying this as an ongoing challenge across multiple quarters and noting it remains in deflation with no clear timeline for resolution. This commodity-specific pressure directly impacts margins and volumes in core residential categories, as evidenced by the 2% decline in residential trade plumbing revenue in Q4 FY25 attributed partly to "ongoing PVC price deflation." The deflation creates a dual challenge: it pressures pricing power in these categories while simultaneously suggesting weaker underlying demand, as falling commodity prices often reflect reduced construction activity. Unlike temporary fluctuations, this persistent PVC deflation represents an ongoing structural headwind that continues to weigh on specific product lines, yet the market may be underestimating its durability and the duration of its impact on Ferguson's residential-related revenue streams.
The HVAC segment faces multiple compounding headwinds that management acknowledged would cause near-term softness, yet the market may be underestimating the combined impact of these factors on growth prospects. These include: persistent weakness in new residential construction (explicitly cited as a pressure point), ongoing consumer affordability concerns driving a shift from replace to repair (which generates significantly less revenue), lapping tough comparables from prior double-digit growth periods, and geographic bifurcation with weak performance in the Western United States. Bill Brundage specifically noted HVAC was down in August and expects "some softness in the near-term on HVAC" embedded in the guidance, while Kevin Murphy described the quarter's performance as "the tale of 2 geographies" with strong East Coast/Midwest performance contrasting with weak Western US sell-through. The structural shift from replace to repair alone represents a fundamental change that limits growth potential, yet this dynamic appears to be insufficiently factored into near-term HVAC growth expectations despite management's repeated references to this trend.
Recent margin strength contains significant temporary elements that the market may be misinterpreting as sustainable improvement, with management explicitly stating they expect gross margins to settle back into the 30%-31% normalized range as temporary supplier price benefits roll off. Bill Brundage was clear that the Q4 FY25 gross margin expansion (31.7%, up 70 bps) included benefits from "the timing and extent of supplier price increases" that would normalize going forward, noting they "started to see that normalization play through" in August gross margins. The Q1 2026 gross margin of 31.0% (up 30 bps) still reflects some residual benefit, but the company's own guidance for 2026 adjusted operating margin of 9.4%-9.8% implies only modest margin expansion from the 9.2% FY25 level. This suggests the market may be overestimating the sustainability of recent margin strength and underestimating the likelihood of mean reversion toward the lower end of the company's historical margin range as temporary factors dissipate.

Subsegments Breakdown of Revenue (2025)

Peer Comparison

Companies in the Industrial Distribution

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	GWW	W.W. Grainger, Inc.	62.04 Bn	32.52	3.33	2.41 Bn
2	FAST	Fastenal Co	58.99 Bn	43.63	6.74	0.12 Bn
3	FERG	Ferguson Enterprises Inc. /DE/	47.94 Bn	23.63	1.53	4.13 Bn
4	WCC	Wesco International Inc	17.74 Bn	24.79	0.71	5.94 Bn
5	AIT	Applied Industrial Technologies Inc	13.19 Bn	32.67	2.73	0.37 Bn
6	WSO	Watsco Inc	11.94 Bn	21.30	1.64	0.12 Bn
7	CNM	Core & Main, Inc.	8.69 Bn	18.49	1.14	2.14 Bn
8	POOL	Pool Corp	7.19 Bn	17.98	1.33	1.34 Bn

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About

Investment Thesis

Subsegments Breakdown of Revenue (2025)

Subsegments Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Datasets

Plans

Developers

About

Investment Thesis

Subsegments Breakdown of Revenue (2025)

Subsegments Breakdown of Revenue (2025)

Peer Comparison

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