Ferguson Enterprises
FERG
$242.24
+1.17%
Ferguson Enterprises Inc. is the largest North American value-added distributor of plumbing and HVAC products, serving repair, maintenance, improvement, new construction, and civil infrastructure markets. With over 1 million customers and 37,000 suppliers, the company operates through approximately 1,700 branches, online channels, and residential showrooms, positioning itself as a market leader in the fragmented industrial distribution space. The current investor narrative centers on the company's ability to navigate weak residential end markets, as evidenced by its Q4 2026 earnings miss, while maintaining profitability through cost discipline and strategic share gains. Additionally, the stock's recent price recovery and analyst optimism around margin expansion and digital transformation are key points of debate, with some analysts downgrading due to near-term demand headwinds.…
FERG
Ferguson Enterprises
$242.24
Related headlines
Investment Opinion: Should I buy FERG Today?
Based on the analysis, FERG is rated a Buy. The consensus recommendation is 'Buy' with an average target price of $287.85, implying 18.8% upside. The thesis is that Ferguson's market leadership, stable margins, and expected earnings recovery will drive the stock higher over the next 12 months, despite near-term demand headwinds.
Sign up to view all
FERG 12-Month Price Forecast
The AI assessment is bullish with medium confidence. Ferguson's strong market position and stable margins provide a solid foundation, and the forward PE suggests the market expects a significant earnings recovery. The main risk is the timing of the recovery in residential markets; if it is delayed, the stock could underperform. However, the analyst consensus and the company's track record of cost management support a positive outlook. I would upgrade to high confidence if revenue growth turns positive, and downgrade to neutral if the forward PE exceeds 25x or if the company issues negative guidance.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ferguson Enterprises's 12-month outlook, with a consensus price target around $288.10 and implied upside of +18.9% versus the current price.
Average Target
$288.10
0 analysts
Implied Upside
+18.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$235 - $325
Analyst target range
Ferguson is covered by 20 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.86 (where 1 is Strong Buy and 5 is Sell). The average target price is $287.85, implying an upside of 18.8% from the current price of $242.24. The distribution of ratings is bullish, with the majority of analysts rating the stock as Buy or Overweight, and only a few Neutral ratings. The recent downgrade by Goldman Sachs from Buy to Neutral on July 7, 2026, is a notable exception, but other firms like Barclays and RBC Capital have maintained Overweight/Outperform ratings, indicating overall positive sentiment.
Bulls vs Bears: FERG Investment Factors
The bull case for Ferguson rests on its dominant market position, strong profitability despite revenue decline, and the market's expectation of a significant earnings recovery, as reflected in the forward PE of 19.27x and analyst target upside of 18.8%. The bear case highlights the persistent weakness in residential end markets, negative revenue growth, and the stock's underperformance relative to the market, which could lead to further de-rating if earnings recovery stalls. Currently, the evidence is balanced but slightly favors the bulls due to the company's proven ability to maintain margins and the potential for a cyclical recovery in housing. The key tension is whether the expected earnings recovery materializes as quickly as the forward PE implies; if residential demand remains weak, the stock could fall to the low end of its range, while a faster recovery could drive it toward the analyst high target.
Bullish
- Strong Analyst Consensus with 18.8% Upside: 20 analysts rate FERG a Buy with a mean recommendation of 1.86 and an average target price of $287.85, implying 18.8% upside from the current $242.24. The high target of $325 suggests even greater potential if residential markets recover.
- Forward PE Indicates Earnings Recovery: The forward PE of 19.27x is significantly lower than the trailing PE of 68.99x, reflecting market expectations of substantial earnings growth. Analysts project EPS of $15.46 for the next fiscal year, up from the current trailing EPS of approximately $3.51, driven by margin expansion and cost discipline.
- Resilient Profitability Despite Revenue Decline: In Q3 FY2026, revenue declined 1.96% YoY to $7.472B, but net income rose to $414M with a net margin of 5.54%, up from 5.38% in the prior year quarter. Operating margin improved to 8.19% from 7.95%, demonstrating effective cost management.
- Strong Market Position and Scale: Ferguson is the largest North American distributor of plumbing and HVAC products, serving over 1 million customers with 1,700 branches. This scale provides competitive advantages in sourcing, logistics, and customer relationships, supporting long-term share gains.
Bearish
- Revenue Growth Negative in Latest Quarter: Q3 FY2026 revenue declined 1.96% YoY to $7.472B, and the trailing twelve-month revenue trend shows deceleration from $8.497B in Q4 FY2025. Weak residential end markets are a primary drag, and there is no clear catalyst for near-term improvement.
- High Trailing PE Signals Overvaluation: The trailing PE of 68.99x is far above the industry average of 15x, indicating that the market is pricing in a massive earnings recovery. If earnings growth disappoints, the stock could face significant de-rating.
- Underperformance Relative to Market: FERG's 1-year return of +5.75% lags the S&P 500's +20.48% by 14.7 percentage points. The 6-month return is -5.00% versus the market's +11.07%, showing persistent relative weakness.
- Analyst Downgrade Signals Caution: Goldman Sachs downgraded FERG from Buy to Neutral on July 7, 2026, citing near-term demand headwinds. This highlights the risk that the consensus may be overly optimistic, and further downgrades could pressure the stock.
FERG Technical Analysis
Ferguson's stock is currently in a recovery phase after a significant correction, with the 1-year price change of +5.75% indicating modest long-term appreciation, though it has underperformed the S&P 500's +20.48% gain over the same period. The current price of $242.24 sits at 63.5% of the 52-week range (between $207.64 low and $271.64 high), suggesting the stock is closer to the lower end of its range, which could represent a value opportunity or reflect lingering bearish sentiment. The 6-month price change of -5.00% and the stock's position below its 52-week high of $271.64 by 10.8% highlight the recent pullback, but the recovery from the low of $207.64 (a 16.7% gain) indicates buyers are stepping in at lower levels.
Beta
1.12
1.12x market volatility
Max Drawdown
-18.6%
Largest decline past year
52-Week Range
$208-$272
Price range past year
Annual Return
+5.8%
Cumulative gain past year
| Period | FERG Return | S&P 500 |
|---|---|---|
| 1m | +5.5% | +3.6% |
| 3m | +8.5% | +2.7% |
| 6m | -5.0% | +11.4% |
| 1y | +5.8% | +18.7% |
| ytd | +7.7% | +12.3% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
FERG Fundamental Analysis
Ferguson's revenue trajectory has been mixed, with the most recent quarter (Q3 FY2026, ending March 31, 2026) showing revenue of $7.472 billion, a -1.96% year-over-year decline, and a sequential decline from the prior quarter's $7.495 billion. Over the past four quarters, revenue has ranged from $7.472 billion to $8.497 billion, with the Q4 FY2025 quarter showing the highest at $8.497 billion, indicating a decelerating trend in recent quarters. The company's revenue is heavily concentrated in the United States segment, which accounted for $7.146 billion of the total, and the weakness in residential end markets has been a key drag, while commercial and industrial segments have shown relative resilience. The negative revenue growth in the latest quarter suggests that Ferguson is facing demand headwinds, but the company's ability to maintain profitability through cost management is a positive sign.
Quarterly Revenue
$7.5B
2026-03
Revenue YoY Growth
-2.0%
YoY Comparison
Gross Margin
31.0%
Latest Quarter
Free Cash Flow
$1.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is FERG Overvalued?
Given that Ferguson's net income is positive (net income of $414 million in the latest quarter), the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE ratio is 68.99x, while the forward PE ratio is 19.27x, indicating that the market expects significant earnings growth in the coming year. The large gap between trailing and forward PE suggests that the market is pricing in a substantial recovery in earnings, which is supported by analyst estimates of EPS of $15.46 for the next fiscal year. Compared to the industry average, Ferguson's forward PE of 19.27x is at a premium to the sector average of 15x, reflecting its market leadership and stable margins, but the premium may be justified by its superior growth prospects and strong cash generation.
PE
69.0x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 10x~33x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
57.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are notable. Ferguson's debt-to-equity ratio of 1.03 indicates significant leverage, and with interest expenses of $45 million in the latest quarter, rising rates could pressure net income. The company's revenue concentration in the US (95.6% of total) exposes it to regional economic downturns, and the recent -1.96% YoY revenue decline shows vulnerability to cyclical demand. While operating margins improved to 8.19%, the high trailing PE of 68.99x leaves little room for error; any earnings miss could trigger a sharp valuation correction. Free cash flow of $1.01B TTM provides some cushion, but the payout ratio of 52.1% suggests limited flexibility for increased dividends or buybacks if cash flow weakens.
FAQ
The key risks are: (1) Financial risk: High debt-to-equity of 1.03 and interest expense of $45M per quarter could pressure margins if rates rise. (2) Market risk: The stock's beta of 1.121 means it is more volatile than the market, and the 6-month underperformance of -16.07% relative to the S&P 500 shows it is sensitive to sector rotation. (3) Competitive risk: Competition from online distributors and other large players could erode market share and pricing power. (4) Company-specific risk: The concentration in the US residential market (95.6% of revenue) makes it highly dependent on housing activity, which is currently weak. The most severe risk is a prolonged housing downturn, which could cause revenue to decline further and the stock to fall to the 52-week low of $207.64, a -14.3% loss.
The 12-month forecast is moderately bullish. The base case (50% probability) sees the stock trading between $260 and $287.85, with the average analyst target of $287.85 as the likely outcome. The bull case (30% probability) could push the stock to $325 if residential markets recover faster than expected. The bear case (20% probability) could see the stock fall to $207.64 if demand deteriorates further. The most likely scenario is a gradual recovery, with the stock appreciating as earnings improve. The key assumption is that revenue growth stabilizes and margins hold, allowing EPS to reach the consensus estimate of $15.46.
On a trailing basis, FERG is overvalued with a PE of 68.99x, but on a forward basis, it is fairly valued at 19.27x, which is a 28% premium to the industry average of 15x. This premium is justified by Ferguson's market leadership, stable margins, and expected earnings growth. The market is pricing in a significant earnings recovery, with EPS expected to rise from $3.51 to $15.46. If that recovery materializes, the stock is undervalued; if not, it could be overvalued. The PEG ratio is negative, indicating that growth is expected to be strong, but the high trailing PE suggests the market has high expectations.
FERG is a good buy for investors with a medium-to-long-term horizon who believe in a housing market recovery. The stock offers 18.8% upside to the average analyst target of $287.85, and the forward PE of 19.27x is reasonable relative to the industry average of 15x. However, the trailing PE of 68.99x and negative revenue growth in the latest quarter highlight the risks. If you are comfortable with cyclical volatility and have a 12-month+ horizon, the risk/reward is favorable. For short-term traders, the stock's recent recovery and positive momentum could offer opportunities, but the high beta (1.121) means significant downside risk.
FERG is more suitable for long-term investment (3-5 years) due to its cyclical nature and the current weakness in residential markets. The stock's beta of 1.121 and 6-month price decline of -5.00% indicate short-term volatility, but the company's strong market position and potential for margin expansion make it a good long-term hold. The dividend yield of 0.75% is modest, but the payout ratio of 52.1% suggests room for growth. For short-term traders, the stock's recent recovery and positive momentum could offer opportunities, but the high volatility and macro sensitivity make it risky. A minimum holding period of 12 months is recommended to allow for the earnings recovery to play out.