# Ferguson (FERG)

Sector: Plumbing and HVAC distribution

| Field | Value |
|---|---|
| Price | $264.50 |
| Market cap | $51B |
| Intrinsic value source | Analysts |
| Data as of | 2026-11-12 |
| Next earnings | 2027-02-16 (confirmed) |

Analysts: Bullish

Picks: Research only

Discount category: Far above intrinsic value

## In short

Ferguson trades above its intrinsic value because investors pay for its non-residential growth and steady margin, and only steady growth, a held margin and lower debt that restarts buybacks can support this price.

## Themes and gap

- Themes: Weak consumer (weak-consumer), High debt (leverage)
- Gap type: Can close (closable)
- Why: The Q4 2026 report on February 16, 2027 and the pace at which debt falls show whether the margin holds and whether buybacks restart.

## About

Ferguson Enterprises Inc. (Ferguson) is the largest value-added distributor of essential water and air solutions in North America. It sells plumbing, HVAC, appliances, lighting, pipe, valves and fittings, and water and wastewater products to specialized professionals in residential and non-residential construction, through about 36,000 associates in over 1,800 locations. Calendar 2025 sales were $31.3 billion. In the first nine months of 2026, sales were $25,249 million: $24,110 million in the US and $1,139 million in Canada. Ferguson is a Delaware company based in Newport News, Virginia. It files Form 10-K, 10-Q and 8-K reports with the SEC, and its shares trade on the New York Stock Exchange as FERG. In May 2026, Ferguson said it was reviewing its secondary listing on the London Stock Exchange, and its releases since August 10, 2026 name only the New York Stock Exchange. Ferguson changed its fiscal year end from July 31 to December 31 and filed a Form 10-KT for the five months to December 31, 2025. Kevin Murphy is Chief Executive Officer.

## Thesis

Ferguson trades above its intrinsic value because investors pay for a high-quality distributor, even though it depends on a construction cycle. About half of its sales are residential, where new building and repair work are weak, so earnings can stop growing before housing recovers. Ferguson has grown faster than its markets by winning non-residential work (up 15% in Q3 2026) and by buying other distributors (eleven deals in 2026 with about $1.5 billion of yearly sales). It paused share buybacks for the $1.6 billion FloWorks purchase, and leverage rose to 1.7 times. For the price to hold, three things must be true. Non-residential growth from large capital projects, water infrastructure and data centers must stay strong while residential sales stop falling. The adjusted operating margin must hold at 9.6% to 9.8% as supplier price increases fade, because the gross margin fell 40 basis points in Q3 2026. And net debt to adjusted EBITDA must fall toward the lower end of the 1 to 2 times range, so that buybacks restart. The Q4 and calendar 2026 report on February 16, 2027 and the first 2027 quarters are the next tests.

## Checkpoints

- Nov 9, 2026: Q3 2026 results: non-residential growth and margin. Status: Passed. Watch: Non-residential sales growth above 10% with an adjusted operating margin near last year's 10.7% passes; a lower margin fails. Outcome: Non-residential sales rose 15%, and the adjusted operating margin was 10.7%, level with last year.
- Feb 16, 2027: Calendar 2026 results and 2027 outlook. Status: Pending. Watch: An adjusted operating margin of 9.6% or more for 2026 and net debt to adjusted EBITDA of 1.7 times or less pass; a lower margin or higher leverage fails.
- 2027 (estimate): Leverage and share buybacks. Status: Pending. Watch: Net debt to adjusted EBITDA that falls toward the lower end of 1 to 2 times, with buybacks restarted during 2027, passes; leverage above 1.7 times through 2027 fails.

## Balance sheet

Ferguson had net debt of $5,695 million at September 30, 2026, or 1.7 times adjusted EBITDA for the last 12 months of $3,419 million, up from 1.0 times a year before. Its range is 1 to 2 times. Long-term debt was $5,571 million, short-term debt was $599 million and cash was $476 million. In Q3 2026 Ferguson priced $1.2 billion of senior unsecured notes and entered a $900 million unsecured term loan that matures in 2029, to pay for FloWorks. Operating lease liabilities of $2,013 million are not in net debt. The $1.5 billion revolving credit facility had no borrowings, and $150 million of private placement notes mature in November 2026. Capital expenditure was $108 million in Q3, and guidance for 2026 is about $425 million. Ferguson has done $136 million of a new $2 billion repurchase program and paused buybacks. At November 2, 2026, there were 193,648,602 shares. The quarterly dividend is $0.89 per share.

As of 2026-09-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/2011641/000201164126000042/exhibit991pressreleasesept.htm
- https://www.sec.gov/Archives/edgar/data/2011641/000201164126000044/ferg-20260930.htm

## Dividends

- Dividend yield: 1.3% (last 12 months, at the current price)
- Paid per share, last 12 months: $3.56 (4 payments)
- Current annual rate: $3.56 ($0.89 x 4 a year)
- Payout ratio: 35% of the earnings of the last fiscal year (the year ended 2025-07-31)
- Latest ex-dividend date: 2026-08-21, $0.89 per share
- Growth from 2020 to 2025: 3.6% a year
- Growth from 2015 to 2025: 4.4% a year

Dividends per share by year: 2016: $1.3685, 2017: $1.5111, 2018: $1.9251, 2019: $2.082, 2020: $2.082, 2021: $4.194, 2022: $3.50, 2023: $3.04, 2024: $3.20, 2025: $2.49.

Source: company filings and market data, read on 2026-11-13.

## Recent events

- 2026-11-09: Ferguson reported Q3 2026 results. Sales were $9.0 billion, up 9.5% with organic growth of 7.0%. Adjusted operating profit was $962 million, up 8.9%, and adjusted EPS was $3.43, up 7.9%, against reported EPS of $3.08. Non-residential sales rose 15% and residential sales rose 6%. Gross margin was 30.9%, down 40 basis points. Ferguson raised its 2026 guidance to sales growth of about 7% and an adjusted operating margin of 9.6% to 9.8%.
- 2026-11-09: Ferguson declared a quarterly dividend of $0.89 per share, payable on January 8, 2027 to holders of record on November 20, 2026. It said it paused share buybacks for the FloWorks purchase and expects to restart them as leverage moves toward the lower end of its 1 to 2 times range. It has completed eleven acquisitions in 2026 with about $1.5 billion of annual sales.
- 2026-08-31: Ferguson completed the purchase of FloWorks, a distributor of valves and flow control products with more than 60 locations, for consideration of $1,616 million. In Q3 2026 it priced $1.2 billion of senior unsecured notes and took a $900 million unsecured term loan that matures in 2029 to pay for it.
- 2026-08-10: Ferguson reported Q2 2026 results. Sales were $8.8 billion, up 4.6%, adjusted EPS was $3.39, up 5.3%, and Ferguson completed five acquisitions in the quarter. It raised its 2026 guidance for sales growth to mid-single digits.
- 2026-07-13: Ferguson agreed to buy FloWorks from Wynnchurch Capital for an enterprise value of about $1.6 billion, about 10 times adjusted EBITDA for the last 12 months when expected cost synergies of about $45 million are counted. FloWorks had revenue of about $1 billion in 2025.
- 2026-05-05: Ferguson reported Q1 2026 results with sales of $7.5 billion, up 3.6%, and adjusted EPS of $2.28, up 9.1%. Its Board approved a new share repurchase program of up to $2 billion, and Ferguson began a review of its secondary London Stock Exchange listing.

## Latest news and filings

- Last earnings: 2026-11-09 (8-K: https://www.sec.gov/Archives/edgar/data/2011641/000201164126000042/)
- Next earnings: 2027-02-16 (confirmed by the company)

| Filed | Form | Headline | Period end | XBRL document | Link |
| --- | --- | --- | --- | --- | --- |
| 2026-11-09 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | ferg-20260930 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000044/ferg-20260930.htm |
| 2026-11-09 | 8-K | Earnings release |  | ferg-20261109 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000042/ |
| 2026-08-14 | 8-K | Other company news |  |  | https://www.sec.gov/Archives/edgar/data/2011641/000114036126033163/ef20080115_8k.htm |
| 2026-08-11 | 8-K | New material agreement and New debt or financial obligation |  |  | https://www.sec.gov/Archives/edgar/data/2011641/000155278126000433/e26338_ferg-8k.htm |
| 2026-08-10 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | ferg-20260630 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000040/ferg-20260630.htm |
| 2026-08-10 | 8-K | Earnings release |  | ferg-20260810 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000038/ |
| 2026-07-13 | 8-K | Investor disclosure |  | ferg-20260713 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000035/ferg-20260713.htm |
| 2026-05-05 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | ferg-20260331 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000030/ferg-20260331.htm |
| 2026-05-05 | 8-K | Earnings release |  | ferg-20260505 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000028/ |
| 2026-05-04 | 8-K | Shareholder vote results |  | ferg-20260430 | https://www.sec.gov/Archives/edgar/data/2011641/000201164126000026/ferg-20260430.htm |

Every filing on SEC EDGAR (CIK 2011641): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0002011641&type=&dateb=&owner=include&count=40

## Risks

- Medium: Residential markets are about half of sales and are weak. New construction and repair and remodeling work are soft, and a longer slump would slow sales and margin even though residential sales grew 6% in Q3 2026.
- Medium: Gross margin fell 40 basis points in Q3 2026, because the prior year was lifted by the timing of supplier price increases. Product prices depend on commodities, supplier price increases and trade restrictions, so margin can move up and down.
- Medium: Ferguson relies on acquisitions for part of its growth. Net debt rose to $5,695 million, or 1.7 times adjusted EBITDA, after FloWorks, and 2026 interest expense guidance rose to about $235 million from about $200 million. A weak result from bought companies would hurt returns.
- Low: Canada sales fell 4.5% in Q3 2026, and Canada made $23 million of adjusted operating profit in the quarter. A weak Canadian market has little effect on Group profit but can lower growth.
- Low: Ferguson is reviewing its secondary London listing. A move to a single listing in New York can change who holds the shares and how they trade.

## Links

- Page: https://picks.utilarium.app/company/FERG/
- History of changes: https://picks.utilarium.app/company/FERG/history/
- JSON with full history: https://picks.utilarium.app/data/company/FERG.json

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