Ferguson Enterprises Inc. /DE/ (FERG)

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AI: Overvalued

Price checkAt this price, strong execution still leaves too little room for cyclical setbacks.

At the August 14 close of $244.94, Ferguson trades at about 22.7 times trailing reported earnings of roughly $10.78 a share, or 22.4 times adjusted earnings of about $10.95, which exclude selected unusual costs. Including June net debt, enterprise value is roughly $52 billion, about 15.6 times trailing operating profit before interest, tax, depreciation and amortization. The $3.56 annualized dividend yields only 1.5%. Those are premium expectations for a cyclical distributor, offering limited downside protection despite sound execution.

Big pictureGrowth is real, but half the business remains tied to weak housing demand.

Calendar 2025 sales rose 5.0% to $31.3 billion, while reported earnings per share increased 24.2% to $10.16. Momentum continued in June 2026: quarterly sales grew 4.6%, with non-residential revenue up 8%. However, residential markets supply about half of revenue and remained subdued; residential sales grew only 2% despite low-single-digit price inflation. This mix provides a strong long-term opportunity if housing recovers, but it also means current growth partly depends on share gains and large projects while underlying residential activity stays soft.

Business strengthProfit is resilient, while cash flow and rising debt deserve closer attention.

Calendar 2025 produced $2.2 billion of operating cash and roughly $1.8 billion of free cash flow, meaning cash left after business investment. Yet first-half 2026 free cash flow fell to $482 million from $982 million, largely because working capital absorbed cash. June current assets exceeded current liabilities by $4.65 billion, but net debt rose to $4.47 billion. Buybacks and dividends totaled $785 million in the half, above free cash flow. Average diluted shares fell from 203.5 million in fiscal 2024 to 196.2 million in the 2025 transition period, showing buybacks more than offset stock awards.

What could change the storyHousing recovery and acquisition gains could justify the price; weaker margins would not.

The bull case needs non-residential growth near June’s 8% rate, a residential recovery, and successful FloWorks integration. Ferguson is paying $1.6 billion, about ten times FloWorks’ operating cash profit including $45 million of expected savings; without those savings, the implied multiple is about 13.9 times. The bear case strengthens if organic growth falls below product inflation, adjusted operating margin slips beneath the guided 9.5% floor, or acquisition debt slows buybacks. At roughly 22 times earnings, the market price requires sustained growth and stable margins rather than merely steady results.

$244.94 price considered

AI: News

Quarterly results and outlookSales and earnings beat expectations, but weak housing demand kept the outlook from looking effortless.

On August 10, 2026, Ferguson reported quarterly sales of $8.75 billion, up 4.6%, and earnings of $3.43 per share, up 6.9%. It raised expected 2026 sales growth to the mid-single digits and narrowed its adjusted operating-margin range to 9.5%-9.8%. Residential revenue rose only 2%, versus 8% non-residential growth. Shares closed 2.76% higher that day but fell 4.65% next session; timing alone cannot establish that results caused either move.

FloWorks acquisition financingThe $1.6 billion FloWorks deal adds industrial growth, while new borrowing raises integration stakes.

Ferguson announced the cash acquisition on July 13, 2026. FloWorks generated about $1 billion of 2025 revenue and serves datacenters, semiconductors, power generation and other technical markets. Ferguson expects $45 million of savings and immediate adjusted earnings growth. On August 11 it priced $1.2 billion of notes, including $700 million at 4.8% and $500 million at 5.6%, implying about $62 million of yearly interest. Shares rose 2.52% on announcement day, though timing does not prove attribution.

S&P 500 additionJoining a major index drew automatic fund buying without changing the business itself.

S&P Dow Jones Indices announced after the July 31 close that Ferguson would enter the S&P 500 before trading on August 5, 2026. Shares gained 6.72% on August 3 on 10.8 million shares of volume, then traded 46.1 million shares on August 4. It is reasonable to infer that index-tracking demand contributed, but the price timing cannot prove causation. Inclusion broadens institutional ownership and liquidity; it does not directly increase Ferguson’s sales, margins or cash flow.

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Financial statements

	2025	2024	2023	2022
Revenue	$30.76B	$29.64B	$29.73B	$28.57B
Gross profit	$9.44B	$9.05B	$9.03B	$8.76B
Operating income	$2.61B	$2.65B	$2.66B	$2.82B
EBITDAderived	$2.98B	$2.99B	$2.98B	$3.12B
Net income	$1.86B	$1.74B	$1.89B	$2.12B
Basic EPSper diluted share	$9.33	$8.55	$9.15	$9.75
Diluted EPSper diluted share	$9.32	$8.53	$9.12	$9.69

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys2$611.2K disclosed value

Sells (SEC code S)21$13.38M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Oct 16, 2025Form 4	Winckler RichardChief Accounting Officer	SellCommon Stock	83	$241.80	$20.1K	1.6K
Oct 15, 2025Form 4	Graham Ian T.See Remarks	SellCommon Stock	606	$239.33	$145.0K	7.7K
Oct 14, 2025Form 4	Winckler RichardChief Accounting Officer	SellCommon Stock	1.0K	$232.70	$240.6K	1.5K
Oct 14, 2025Form 4	Paisley James A.See Remarks	SellCommon Stock	3.0K	$236.97	$710.9K	2.2K
Oct 13, 2025Form 4	Camposano Robert Anthony Jr.Senior VP - Waterworks	SellCommon Stock	1.6K	$233.23	$373.2K	8.3K

Review ownership filings at SEC.gov ↗

Ferguson Enterprises Inc. /DE/ (FERG)

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Insider buys & sells