FERG

Ferguson plc

Next est. report 2026-11-05 · BMO

Buying a House '24: Home ServicesBuying a House '26: Kitchen & Bathroom UpdateBuying a House '26: Residential HVAC & PlumbingClimate Adaptation '26: Americans Beating the HeatData Centers '25: Water & Fluid SystemsFiscal Spend '25: HVAC Fiscal Spend '25: US Defense Modernization & Shipbuilding Homebuilding '26: Home Improvement, Installers & Distribution Shipbuilding '26: Shipbuilding Components & Equipment TrumpPolicy PreElection Short '24: Tariff Losers

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Overview

Ferguson plc is North America's largest distributor of essential water and air solutions, including plumbing, HVAC, and waterworks products. Headquartered in th

Ferguson plc is North America's largest distributor of essential water and air solutions, including plumbing, HVAC, and waterworks products. Headquartered in the US, it serves over a million professional contractors across residential and non-residential markets, with revenue split evenly. The company recently expanded its industrial offerings by acquiring FloWorks, adding specialized valves and flow control solutions for large capital projects like data centers and manufacturing.

Key Inputs And Sourcing

1. Finished Goods / Branded Components

component · Global · >90% of total purchases

Source Ferguson states over 90% of purchases are from branded manufacturers, encompassing a wide range of plumbing, HVAC, and industrial products.

Confidence: high

2. PVC (Polyvinyl Chloride) Pipe & Fittings

commodity · PCU326190326190P · North America · unknown, part of ~15% of revenue from commodities

Source Explicitly mentioned as a commodity in deflation and a key input, particularly for Waterworks.

Confidence: high

3. Steel Products (Pipes, Valves, Fittings)

commodity · WPU101701 · North America · unknown, part of ~15% of revenue from commodities

Source Mentioned as a commodity seeing modest inflation. Used in various plumbing, HVAC, and industrial products.

Confidence: medium

4. Copper Products (Pipes, Wiring)

commodity · WPU102101 · North America · unknown, part of ~15% of revenue from commodities

Source Mentioned as a commodity seeing modest inflation. Used in plumbing, HVAC, and electrical components.

Confidence: medium

5. HVAC Equipment (Units & Components)

component · Global · unknown, significant portion of finished goods

Source HVAC is a major customer group and focus area for M&A, indicating significant product input.

Confidence: high

6. Valves & Flow Control Solutions

component · Global · unknown, significant portion of industrial/waterworks finished goods

Source Highlighted by the acquisition of FloWorks, a leading distributor of highly technical valves and flow control solutions.

Confidence: high

7. Logistics/Transportation

logistics · North America · unknown

Source Implied by Ferguson's extensive distribution network and focus on supply chain expansion and optimization.

Confidence: medium

8. Energy (Fuel & Utilities)

energy · North America · unknown

Source As a large distributor with numerous branches and distribution centers, energy costs for operations and transportation are significant.

Confidence: medium

9. Resin (Plastic Raw Material)

commodity · WPU06130201 · North America · unknown, precursor to PVC

Source Mentioned as a precursor to PVC price increases.

Confidence: medium

Industry Publications

ACHR News (www.achrnews.com) — Primary trade publication for the HVAC/R industry, covering equipment, refrigerants (including the A2L transition), and market trends relevant to Ferguson's HVAC segment.
Plumbing & Mechanical Magazine (www.pmmag.com) — Key publication for plumbing contractors, covering new products, industry regulations, and business practices directly impacting Ferguson's core plumbing business.
WaterWorld Magazine (www.waterworld.com) — Covers municipal water and wastewater infrastructure, a critical and growing end-market for Ferguson's Waterworks customer group.
Data Center Dynamics (www.datacenterdynamics.com) — Essential for tracking the AI-driven data center build-out, cooling technologies, and power infrastructure, which is a significant growth driver for Ferguson's large capital projects.
Contractor Magazine (www.contractormag.com) — Provides broad coverage for mechanical, plumbing, and HVAC contractors, offering insights into Ferguson's diverse customer base and market conditions.

Economic Data Watch

1. U.S. Census Bureau — New Residential Construction

Metric/field New Privately-Owned Housing Units Started: Total Units (HOUST)

Cadence monthly

Why it matters FERG's residential segment (approx. 50% of revenue) is directly impacted by new housing construction. An increase signals potential for higher sales of plumbing, HVAC, and waterworks products.

Signal to watch Sustained month-over-month or year-over-year increase indicates a strengthening residential market.

Confidence: high

2. U.S. Census Bureau — New Residential Construction

Metric/field New Privately-Owned Housing Units Authorized by Building Permits: Total Units (PERMIT)

Cadence monthly

Why it matters Building permits are a leading indicator for future housing starts and residential construction activity, providing insight into FERG's forward demand for residential products.

Signal to watch Consistent growth in permits suggests a healthy pipeline for future residential sales.

Confidence: high

3. U.S. Census Bureau — Construction Spending

Metric/field Construction Spending: Private Nonresidential, Manufacturing (W900C1)

Cadence monthly

Why it matters FERG benefits significantly from large capital projects, including manufacturing and onshoring initiatives. This metric directly tracks spending in this key non-residential segment.

Signal to watch Continued strong growth indicates sustained demand for industrial and commercial mechanical products.

Confidence: high

4. U.S. Bureau of Labor Statistics (BLS) — Producer Price Index by Commodity

Metric/field Producer Price Index by Commodity: Plastics Products: Plastic pipe and fittings (WPUSI012011)

Cadence monthly

Why it matters Commodity prices, particularly PVC, impact FERG's Waterworks segment revenue and gross margins. PVC has been in deflation, so monitoring its trend is crucial.

Signal to watch Stabilization or an increase in the index would alleviate deflationary pressure and support Waterworks margins.

Confidence: high

5. Freddie Mac — Primary Mortgage Market Survey (PMMS)

Metric/field 30-Year Fixed-Rate Mortgage Average in the United States (MORTGAGE30US)

Cadence weekly

Why it matters Mortgage rates directly influence housing affordability, buyer demand, and refinancing activity, which in turn affect residential new construction and repair/maintenance/improvement (RMI) projects.

Signal to watch Declining or stable rates could stimulate residential market activity, while rising rates could dampen it.

Confidence: high

Free Alt Data Watch

1. Google Trends — Search Interest

Metric/field Search term: "HVAC repair cost"

Cadence daily

Why it matters Increased search interest for HVAC repair costs can indicate higher consumer demand for HVAC services and replacement parts, which directly impacts FERG's HVAC segment.

Signal to watch Rising search volume suggests increased activity in the HVAC repair and replacement market.

Confidence: medium

2. Google Trends — Search Interest

Metric/field Search term: "data center construction"

Cadence daily

Why it matters FERG has a significant exposure to large capital projects, particularly data centers. Tracking search interest provides an early, public indicator of industry momentum and investor/developer interest.

Signal to watch Sustained or increasing search volume points to ongoing strong interest and potential project pipeline in data center construction.

Confidence: medium

3. Reddit (r/HVAC) — Subreddit Activity/Sentiment

Metric/field Count of posts/comments mentioning 'A2L refrigerant' or 'labor shortage'

Cadence weekly

Why it matters The HVAC industry is undergoing an A2L refrigerant transition and faces skilled labor shortages. Monitoring discussions on these topics provides qualitative insights into market challenges and opportunities for FERG's contractor customers.

Signal to watch Decreasing mentions of 'labor shortage' or positive sentiment around 'A2L transition' could indicate easing headwinds.

Confidence: medium

4. PowerOutage.us — U.S. Major Power Outage Events

Metric/field Number of Events and Average Duration of Outages (aggregated by state/region)

Cadence event_driven

Why it matters Increased power outages can drive demand for backup power solutions and related infrastructure, impacting FERG's industrial and commercial segments, especially for critical facilities like data centers.

Signal to watch Rising frequency or duration of outages suggests increased grid instability and potential for higher demand for resilient infrastructure products.

Confidence: medium

5. U.S. Census Bureau — Value of Construction Put in Place Survey (VIP)

Metric/field Total Construction Spending: Commercial in the United States (TLCOMCONS)

Cadence monthly

Why it matters This provides a broad overview of commercial construction activity, which is a significant portion of FERG's non-residential business, complementing the manufacturing-specific data.

Signal to watch Positive growth indicates a healthy commercial construction market, supporting FERG's sales in commercial mechanical and other non-residential groups.

Confidence: high

Paid Alt Data Watch

1. Placer.ai — Foot Traffic Analytics

Metric/field Total Visits to 'Building Material and Garden Supply Stores' (e.g., Home Depot, Lowe's, or aggregated industrial distributors)

Cadence weekly

Why it matters Foot traffic to major construction and home improvement retailers, and potentially FERG's own branches (if available), can serve as a proxy for overall contractor and consumer activity in residential and light commercial markets.

Signal to watch Consistent or increasing foot traffic suggests healthy demand for building products and services.

Confidence: high

2. Revelio Labs — Workforce Data & Analytics

Metric/field Employee Headcount Growth: 'Plumbers', 'HVAC Technicians', 'Construction Workers' (by region)

Cadence monthly

Why it matters Skilled labor shortages are a key constraint in the construction and home services industries. Tracking headcount growth for these trades provides insight into labor availability and potential project execution capacity for FERG's customers.

Signal to watch Positive growth in skilled trades headcount indicates easing labor constraints, potentially boosting project completion rates and demand for FERG's supplies.

Confidence: high

3. Thinknum Alternative Data — Job Postings Data

Metric/field Active Job Postings: 'HVAC Technician' or 'Plumber' (filtered by FERG's key operating regions)

Cadence weekly

Why it matters Job postings serve as a real-time indicator of labor demand in the trades FERG serves. High or increasing postings suggest strong underlying activity and potential for FERG's dual-trade strategy.

Signal to watch Rising job postings signal robust demand for skilled labor, implying strong project backlogs for FERG's customers.

Confidence: high

4. ImportGenius / Panjiva — Global Trade Data

Metric/field U.S. Import Volume (TEUs/Weight) for HS Codes related to 'Pipes, Valves, Fittings' or 'HVAC Equipment'

Cadence monthly

Why it matters Tracking import volumes of core products FERG distributes provides insight into overall supply chain health, inventory levels, and anticipated demand from manufacturers and other distributors.

Signal to watch Consistent import volumes or increases suggest stable supply and/or growing demand for these product categories.

Confidence: high

5. Orbital Insight / RS Metrics — Geospatial Analytics (Satellite Imagery)

Metric/field New Construction Activity: 'Industrial Facilities' or 'Data Centers' (identified by ground-breaking, foundation work, etc.)

Cadence quarterly

Why it matters FERG's 'large capital projects' segment is a key growth driver. Satellite imagery can provide early, independent verification of new construction starts and progress for major industrial and data center projects.

Signal to watch Detection of new large-scale ground-breaking or significant construction progress indicates a robust pipeline for FERG's high-value projects.

Confidence: high

Search Keywords Brand Product

HVAC systems
plumbing supplies
waterworks products
industrial valves
flow control solutions
fire sprinkler systems
water meters
pipe fittings
PVF systems
valve automation
pumps
fluid handling systems
industrial distribution
construction supplies
large capital projects
data center construction
water infrastructure
climate control
residential construction
non-residential construction
MRO distribution
dual trade contractors

Search Keywords Event Phrases

Ferguson earnings
FloWorks acquisition

Search Keywords Policy Regulatory

A2L refrigerant transition
infrastructure spending

What They Do (Plain English & Analogies): Ferguson plc acts like a giant, specialized 'Amazon for contractors' in North America, providing all the essential 'behind-the-walls' products and solutions needed to build and maintain homes, businesses, and infrastructure. They supply everything from pipes, valves, and fittings to water heaters, air conditioning units, and fire sprinkler systems. Imagine them as the 'circulatory system' of a building project, ensuring that plumbers, HVAC technicians, and other specialized contractors get the right materials, exactly when and where they need them, simplifying complex construction and maintenance work. They also offer expert advice, project management, and digital tools to help these professionals get their jobs done efficiently.
Very Brief History: Founded in 1887 as Wolseley in the UK, Ferguson evolved from a manufacturing conglomerate into a global distribution leader. Over the last decade, the company strategically transformed to focus exclusively on North America, divesting its European and UK operations, relocating its headquarters to the US, and changing its primary stock listing to the NYSE. By 2024, it completed its corporate re-domiciliation to the United States, aligning its corporate structure with its predominantly US-based profit stream.
"Street Stereotype": Ferguson is generally perceived by investors and analysts as a 'Quality Compounder.' It's seen as a high-moat, scale-advantaged 'GDP+' play that leverages its position as the largest player in a fragmented market. This allows it to secure better terms from suppliers and offer superior product availability to customers compared to smaller, local distributors. It's often grouped with other high-quality industrial distributors.
Subsidiaries On Linked In*: Wolseley Inc. — Operates in Canada; LinkedIn: wolseley-inc
FloWorks — Acquired post-Q2 2026, industrial distributor and service provider of valves and flow control solutions; LinkedIn: floworks
Hamlett Environmental Technologies — Acquired in Q2 2026, strengthens water and wastewater process equipment expertise; LinkedIn: hamlett-environmental-technologies
Carrier Great Lakes — Acquired in Q2 2026, distributor of residential and commercial HVAC products; LinkedIn: carrier-great-lakes
Dealers Supply Company — Acquired in Q2 2026, provides HVAC equipment, parts, supplies, and fabrication services; LinkedIn: dealers-supply-company
New England Applied Products — Acquired in Q2 2026, manufacturer's representative of commercial HVAC systems; LinkedIn: new-england-applied-products
PRD Technologies Group — Acquired in Q2 2026, strengthens product portfolio with highly technical valves, flow control, and process equipment; LinkedIn: prd-technologies-group
Customer Sectors & Example Clients: Ferguson serves diverse customer sectors including: **Residential** (new construction, repair, maintenance, and improvement - RMI), **Commercial** (data centers, healthcare, education, advanced manufacturing, energy, biotech, general manufacturing), **Civil/Infrastructure** (public works, municipal water, wastewater treatment, stormwater management), and **Industrial** (energy, pulp and paper, chemical, mining, pharmaceutical, food and beverage, life sciences, power generation). They serve project stakeholders including owners, engineers, general contractors, and specialized customers. Educated guesses for top clients include large homebuilders like Lennar and D.R. Horton, general contractors such as Turner Construction or Bechtel, and tech giants building data centers like Amazon (AWS), Microsoft, and Meta.
New Customers / Segments They'Re Targeting: Ferguson is actively targeting several new customer sets and segments. They are expanding their focus on **dual-trade contractors** who handle both plumbing and HVAC work, aiming to be a comprehensive solution for these professionals. With the acquisition of FloWorks, they are significantly enhancing their exposure to **key growth areas with secular tailwinds** such as large capital projects, water infrastructure, data centers, semiconductors, biotechnology and pharma, power generation, food and beverage, and general manufacturing. This also includes strengthening their **specialty industrial flow control platform** and adding significant recurring MRO-driven revenue.
Sales Geographies And Expansion Plans: Ferguson currently sells its products throughout the United States and Canada. The recent acquisition of FloWorks further expands their footprint across the United States and Canada with over 60 locations. Management's commentary in the transcript does not explicitly indicate plans to expand sales into new geographic countries beyond North America, but rather focuses on expanding capabilities and market share within their existing North American footprint.
How Key Themes May Help/Hurt: The 'Climate Adaptation '26: Americans Beating the Heat' theme significantly benefits Ferguson. Rising temperatures and more frequent heat waves drive non-discretionary demand for residential, commercial, and industrial cooling solutions, directly boosting sales in their HVAC segment. The exponential growth of AI and data centers creates massive demand for advanced cooling systems and electrical infrastructure, which Ferguson addresses through its Commercial/Mechanical and Industrial customer groups, particularly with its strong execution on large capital projects. Regulatory mandates, such as the A2L refrigerant transition, and consumer demand for energy efficiency also drive investments in new, more efficient HVAC systems, creating a replacement cycle that benefits Ferguson as a key distributor. While residential cooling faces macroeconomic headwinds, the strong commercial and infrastructure tailwinds from this theme provide a compelling long-term outlook for Ferguson.

3 Main Long-Term Bull Details

Dominant Position in Fragmented Markets & Strategic M&A: Ferguson holds a significant, yet still consolidatable, share of the North American market, providing a long runway for growth through disciplined 'bolt-on' acquisitions. Their proven track record of M&A, including eight announced acquisitions year-to-date 2026, allows them to consolidate markets, expand capabilities (e.g., HVAC, industrial flow control), and leverage scale for synergies.
Exposure to High-Growth Structural Tailwinds: The company is uniquely positioned to capitalize on multi-year structural trends, including a once-in-a-generation build-out of large capital projects (data centers, advanced manufacturing, power generation), significant investment in aging water infrastructure, and evolving climate and comfort demands (HVAC efficiency).
Value-Added Solutions & Operational Excellence: Ferguson differentiates itself by offering comprehensive value-added solutions, such as custom fabrication, project management, and digital tools, which enhance construction productivity for customers facing skilled labor shortages. This, combined with disciplined gross margin management, SG&A leverage, and continuous investment in supply chain optimization and technology, drives consistent operating margin expansion and strong cash generation.

3 Main Long-Term Bear Details

Persistent Residential Market Headwinds: Roughly half of Ferguson's revenue is tied to residential markets. Prolonged high interest rates, low housing turnover, and affordability concerns can significantly dampen new housing starts, permits, and repair/maintenance/improvement work, leading to sustained pressure on a substantial portion of their business.
Commodity Price Volatility & Deflation Risk: A significant portion of Ferguson's sales, particularly in Waterworks, is linked to commodity prices like PVC. While finished goods pricing shows modest improvement, deflation in commodity-related categories can compress revenue and gross margins, challenging margin maintenance.
Economic Uncertainty and Project Lumpy-ness: The overall economic environment remains uncertain, and while large capital projects are a significant growth driver, they can introduce 'lumpiness' and longer gestation periods for revenue recognition. These projects are susceptible to delays due to labor shortages, supply chain volatility, or shifts in fiscal policy, which could lead to earnings volatility.

Competitors And Differentiation: Ferguson operates in a highly fragmented market with numerous regional and local distributors, as well as larger national players like Winsupply, Hajoca Corporation, Core & Main (for Waterworks), and specialized distributors such as Watsco (for HVAC). Ferguson differentiates itself through its: **Scale and breadth of products**, offering a vast array of essential water and air solutions. **Multi-customer group approach**, allowing them to serve diverse end-markets (residential, commercial, industrial, waterworks) and leverage cross-sell opportunities. **Value-added capabilities** including project management, custom fabrication, early design engagement, supply chain management, digital tools, quotation services, jobsite delivery, advanced metering infrastructure (AMI) services, and equipment rental. A **world-class supply chain** and **expert associates** who drive productivity for specialized professionals. Their **disciplined M&A strategy** also allows them to consolidate fragmented markets and acquire key capabilities, such as the recent FloWorks acquisition which expands their specialty industrial flow control platform.
Recent Performance & What The Market'S Focused On: Ferguson delivered strong second-quarter results for the period ended June 30, 2026, with sales of $8.8 billion, up 4.6% over the prior year, driven by 3.8% organic growth and 1% acquisition growth. Operating profit increased 2.9% to $932 million, and diluted earnings per share rose 5.3% to $3.39. The company saw strong non-residential performance with 8% growth and a return to growth in the residential market, up 2%. HVAC revenue grew 11%. Post-quarter end, Ferguson announced the acquisition of FloWorks for approximately $1.6 billion, expected to be immediately accretive to adjusted earnings per share. Management raised its full-year 2026 guidance, now expecting mid-single-digit net sales growth and an operating margin in the range of 9.5%-9.8%. The market is focused on the continued strong performance in large capital projects (especially data centers), the successful integration and revenue synergies from recent acquisitions like FloWorks, the stabilization and growth in the HVAC segment, and the company's ability to generate operating leverage despite a mixed market and some gross margin normalization.

Revenue Segments And Estimated Mix: Non-residential — Mix: ~50%; Source: Existing text table; Trend: Up 8% in Q2 2026, driven by large capital projects.
Residential — Mix: ~50%; Source: Existing text table; Trend: Up 2% in Q2 2026, despite headwinds.
Waterworks — Mix: n/m; Source: Q2 2026 transcript; Trend: Grew 3% in Q2 2026.
Commercial Mechanical — Mix: n/m; Source: Q2 2026 transcript; Trend: Grew 15% in Q2 2026.
Industrial — Mix: n/m; Source: Q2 2026 transcript; Trend: Grew 18% in Q2 2026.
Facility Supply — Mix: n/m; Source: Q2 2026 transcript; Trend: Increased 5% in Q2 2026.
Fire and Fabrication — Mix: n/m; Source: Q2 2026 transcript; Trend: Declined 13% in Q2 2026.
Ferguson Home — Mix: n/m; Source: Q2 2026 transcript; Trend: Declined 1% in Q2 2026.
Residential Trade Plumbing — Mix: n/m; Source: Q2 2026 transcript; Trend: Relatively flat in Q2 2026.
HVAC — Mix: n/m; Source: Q2 2026 transcript; Trend: Grew 11% in Q2 2026.
Product Brands: Ferguson
Wolseley Inc.
Sunbelt Supply
Major Inc.
Southwest Valve
J&S Valve
Valve Systems
Triple S
Hamlett Environmental Technologies
Carrier Great Lakes
Dealers Supply Company
New England Applied Products
PRD Technologies Group

Bull / Bear Details

Ferguson, North America's leading water and air solutions distributor, continues to leverage its scale and multi-customer group approach. Strong execution in la

Thesis

Ferguson, North America's leading water and air solutions distributor, continues to leverage its scale and multi-customer group approach. Strong execution in large capital projects and a significant FloWorks acquisition are expanding its addressable market and industrial capabilities. Despite mixed residential markets, a robust HVAC rebound and disciplined M&A drive consistent outperformance, margin expansion, and shareholder value. (Updated: 2026-09-06)

Bull case

Ferguson continues to demonstrate strong outperformance in non-residential segments, with Commercial Mechanical growing 15% and Industrial 18% in Q2. The strategic FloWorks acquisition significantly expands its specialty industrial flow control platform, adding technical depth and increasing the total addressable market from $340 billion to $400 billion, reinforcing its leadership in critical infrastructure projects like data centers and power generation.
Ferguson has executed a disciplined M&A strategy, announcing eight acquisitions year-to-date, including the substantial $1.6 billion FloWorks deal. FloWorks is expected to be immediately accretive to adjusted EPS, add significant recurring MRO-driven revenue, and enhance cross-sell opportunities. These strategic acquisitions expand capabilities across HVAC, water infrastructure, and industrial valves, consolidating fragmented markets and driving future growth.
The company delivered strong Q2 results, with sales increasing 4.6% and diluted earnings per share rising 5.3%, leading to an upward revision of full-year guidance for net sales and operating margin. Notably, the HVAC segment returned to robust 11% growth, demonstrating successful execution of its dual-trade and greenfield expansion strategies, effectively offsetting broader residential headwinds.

Bear case

Despite a return to 2% growth in Q2, the residential market still faces "persistent headwinds across both new construction and repair maintenance and improvement work." Traditional non-residential activity remains softer, and the overall economic environment is described as "mixed" and "uncertain." Markets in Canada also remain challenging, particularly in residential.
While overall inflation has decelerated to low-single-digits, commodity-related categories, particularly PVC, remain in "double-digit deflation." This continues to pressure Waterworks margins. Management also expects gross margin to be "a bit down" in Q3 compared to a strong prior-year comparable, indicating ongoing margin normalization.
The FloWorks acquisition, while strategic, is one of Ferguson's largest to date at an enterprise value of approximately $1.6 billion. It is expected to increase net debt-to-EBITDA from 1.3x to approximately 1.8x, pushing leverage towards the upper end of the target range. This introduces integration risks and limits immediate share buyback capacity.

Bull / Bear Case

Bear Case: Despite a return to 2% growth in Q2 2026, the residential market still faces "persistent headwinds across both new construction and repair maintenance and improvement work." Traditional non-residential activity remains softer, and the overall economic environment is described as "mixed" and "uncertain." Markets in Canada also remain challenging, particularly in residential. While overall inflation has decelerated to low-single-digits, commodity-related categories, particularly PVC, remain in "double-digit deflation," which continues to pressure Waterworks margins. Management also expects gross margin to be "a bit down" in Q3 compared to a strong prior-year comparable, indicating ongoing margin normalization. The FloWorks acquisition, while strategic, is one of Ferguson's largest to date at an enterprise value of approximately $1.6 billion. It is expected to increase net debt-to-EBITDA from 1.3x to approximately 1.8x, pushing leverage towards the upper end of the target range, which introduces integration risks and limits immediate share buyback capacity.
Bull Case: Ferguson continues to demonstrate strong outperformance in non-residential segments, with Commercial Mechanical growing 15% and Industrial 18% in Q2 2026. The strategic FloWorks acquisition significantly expands its specialty industrial flow control platform, adding technical depth and increasing the total addressable market from $340 billion to $400 billion, reinforcing its leadership in critical infrastructure projects like data centers and power generation. Ferguson has executed a disciplined M&A strategy, announcing eight acquisitions year-to-date, including the substantial $1.6 billion FloWorks deal, which is expected to be immediately accretive to adjusted EPS and enhance cross-sell opportunities. The company delivered strong Q2 results, with sales increasing 4.6% and diluted earnings per share rising 5.3%, leading to an upward revision of full-year guidance for net sales and operating margin. Notably, the HVAC segment returned to robust 11% growth, demonstrating successful execution of its dual-trade and greenfield expansion strategies, effectively offsetting broader residential headwinds.
More Compelling & Why: Bear. The stock trades at a P/E ratio of approximately 26.85x, which is above its 10-year historical average of 23.70x and the industry average for building materials. This premium valuation makes the company susceptible to downside from persistent residential market headwinds, commodity deflation, and increased leverage post-FloWorks acquisition. My view would flip if the residential market showed sustained, strong recovery or if the valuation multiples compressed significantly to align more closely with historical averages and industry peers, reflecting a more attractive risk/reward profile.

Key Factors5 rows

Key Factor	Why It Matters	What To Watch	What It Signals	Where/How To Track	Free Alt Data	Paid Alt Data
Growth in Large Capital Project Open Order Volumes and Revenue	Large capital projects, especially data centers and advanced manufacturing, are a primary growth driver, offsetting residential weakness and validating Ferguson's strategic focus on high-value infrastructure and the 'Fiscal Spend' thesis.	Management commentary on open order volumes, backlog growth, and revenue contribution from large capital projects (e.g., data centers, power generation, chemical, pharma) in Q3 and Q4 2026 earnings calls. Specific growth rates for Commercial Mechanical and Industrial segments.	Open order volume growth > 10% YoY for large capital projects and sustained double-digit revenue growth in Commercial Mechanical and Industrial segments = Bullish. Stagnation or project delays in data center/onshoring starts, or deceleration in these segments = Bearish.	Ferguson's Q3 and Q4 2026 earnings announcements and conference call transcripts. Industry reports from Dodge Data & Analytics on non-residential construction starts.	Data Center Dynamics (www.datacenterdynamics.com) for news on data center build-out and cooling technologies. Industry association reports (e.g., Associated General Contractors of America).	Dodge Data & Analytics: Non-residential Construction Starts (Data Centers); Thinknum: Job postings for data center construction roles.
Ferguson's Full-Year 2026 Operating Margin Performance	Operating margin is a key indicator of the company's profitability and operational efficiency. Upward revisions signal strong execution and favorable market conditions, directly impacting shareholder value and validating the company's 'Quality Compounder' thesis.	Ferguson's reported operating margin in Q3 and Q4 2026 earnings, and any further updates to the full-year 2026 operating margin guidance (currently 9.5%-9.8%).	Operating margin tracking towards or exceeding the high end of the 9.5%-9.8% guidance range = Bullish. Operating margin tracking below the low end of the 9.5%-9.8% guidance range = Bearish.	Ferguson's Q3 and Q4 2026 earnings announcements and conference call transcripts, available on the Investors section of their corporate website and SEC Filings webpage.	Financial news outlets (e.g., Reuters, Bloomberg) for earnings summaries and analyst consensus estimates.	Bloomberg Terminal: FERG consensus estimates for operating margin; FactSet: FERG operating margin historicals and estimates.
US Monthly Housing Starts & Residential Market Recovery	Despite non-residential strength, the residential market still accounts for approximately half of Ferguson's revenue. A sustained recovery in housing starts would alleviate headwinds and provide broader growth, impacting the 'Homebuilding' theme.	Monthly US Census Bureau data for Privately Owned Housing Starts and Building Permits. Ferguson's reported residential market revenue growth (Ferguson Home, Residential Trade Plumbing) in Q3 and Q4 2026 earnings.	Housing starts > 1.45M (annualized rate) and sustained positive residential revenue growth for Ferguson = Bullish. Starts < 1.3M (annualized rate) and continued declines in Ferguson's residential segments = Bearish.	Monthly US Census Bureau data releases (www.census.gov/construction/housing, typically mid-month for prior month). Ferguson's Q3 and Q4 2026 earnings announcements and conference call transcripts.	U.S. Census Bureau: Housing Starts and Permits (www.census.gov/construction/housing). National Association of Home Builders (NAHB) housing market index.	Freddie Mac: Primary Mortgage Market Survey (PMMS) - 30-Year Fixed Mortgage Rate; Evercore ISI: Housing data reports.
HVAC Segment Revenue Growth & Dual-Trade Strategy Success	Strong HVAC performance, driven by the dual-trade strategy and M&A, is crucial for residential market recovery and overall organic growth, aligning with the 'Climate Adaptation' theme and demonstrating successful market outperformance.	Ferguson's reported HVAC segment revenue growth in Q3 and Q4 2026 earnings. Management commentary on the success of dual-trade initiatives, greenfield expansions, and contributions from recent HVAC acquisitions.	HVAC revenue growth > 10% (sustaining Q2 momentum) = Bullish. HVAC revenue growth decelerating below mid-single-digits or negative growth = Bearish.	Ferguson's Q3 and Q4 2026 earnings announcements and conference call transcripts.	AHRI (Air-Conditioning, Heating, and Refrigeration Institute) for U.S. Residential & Commercial HVAC Equipment Shipments (Units). Reddit (r/HVAC) for contractor sentiment on equipment and demand.	M Science: HVAC equipment sales data; Placer.ai: Foot traffic to Ferguson locations with strong HVAC presence.
FloWorks Acquisition Closing & Initial Integration Metrics	This is Ferguson's largest acquisition to date, significantly expanding its addressable market and industrial capabilities. Its successful closing and integration are critical for future growth, EPS accretion, and strengthening the industrial customer group.	Official announcement of the FloWorks acquisition closing (expected in Q3 2026). Management commentary in Q3 2026 earnings on initial integration progress, expected revenue and cost synergies ($45 million), and updated full-year guidance reflecting FloWorks.	Acquisition closes as expected in Q3 2026 and management reaffirms or raises EPS accretion and synergy targets = Bullish. Delays in closing, or negative revisions to accretion/synergy expectations = Bearish.	Ferguson's Q3 2026 earnings announcement and conference call transcript (expected around November 2026). Company press releases.	Financial news wires (e.g., Reuters, Bloomberg) for M&A updates.	S&P Global Market Intelligence: M&A deal tracking and synergy analysis; AlphaSense: Keyword searches for 'FloWorks integration' in company documents and news.

Key Reported Metrics, Reratings Triggers & Results3 rows

Operating profit growth reflects Ferguson's operational efficiency, cost discipline, and ability to manage gross margins against tough comparisons and commodity

Upcoming print · 2026-11-05

Key reported metrics
Metric	Last period	Why it matters
Operating Profit Growth	2.9%	Operating profit growth reflects Ferguson's operational efficiency, cost discipline, and ability to manage gross margins against tough comparisons and commodity deflation, driving overall earnings expansion and shareholder value.
HVAC Segment Revenue Growth	11%	The HVAC segment's return to strong growth validates Ferguson's dual-trade strategy and M&A. Its sustained momentum is essential for offsetting broader residential headwinds and achieving the company's updated revenue guidance.
US Non-Residential Revenue Growth	8%	This segment, driven by large capital projects like data centers and manufacturing, is a core growth driver offsetting residential weakness. Continued strong performance is crucial for overall revenue outperformance and validating the investment thesis.

Last reported · 2026-05-05

Key reported metrics
Metric	Last period	Why it matters
Adjusted Operating Profit Growth	13.8%	Reflects Ferguson's ability to expand earnings through operational efficiency and cost discipline, a key aspect of its 'Quality Compounder' stereotype and margin expansion strategy.
HVAC Segment Revenue Growth	declined 7%	This segment is navigating a difficult transition to new A2L efficiency standards, causing pressure. Its stabilization or return to positive growth is crucial for overall organic growth and validating the dual-trade strategy.
US Non-Residential Revenue Growth	10%	This segment is the core driver of Ferguson's 'Fiscal Spend' thesis, validating demand from large capital projects like data centers and infrastructure, which are critical to offsetting residential headwinds. Investors are watching for sustained double-digit growth.

Key Questions

Will Ferguson sustain its strong outperformance and accelerated revenue growth in large capital projects and non-residential segments, including the accretive i

Will Ferguson sustain its strong outperformance and accelerated revenue growth in large capital projects and non-residential segments, including the accretive impact and synergy realization from the FloWorks acquisition, to exceed its raised mid-single-digit full-year revenue guidance?

Question 2: Can Ferguson maintain the accelerated growth in its HVAC segment (11% in Q2) and sustain the return to positive growth in the broader residential market, validating its dual-trade strategy and offsetting persistent headwinds in new construction and RMI?
Question 3: Will Ferguson achieve the high end of its raised 9.5%-9.8% operating margin guidance for 2026 by effectively managing gross margin against tough prior-year comparisons and commodity deflation, while realizing expected SG&A leverage and initial synergies from the FloWorks acquisition?

Earnings Transcript Summary3 rows

2026-08-10 · 2026Q2 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
3 Things Management Is Most Focused On1. Capital Allocation and Strategic Acquisitions: Management is heavily focused on executing its capital priorities, notably through strategic acquisitions. They announced eight acquisitions year-to-date, including the significant FloWorks acquisition for approximately $1.6 billion, expanding their addressable market and capabilities in industrial flow control. 2. Driving Market Outperformance and Volume Growth: Despite a mixed economic environment, management is focused on delivering market outperformance with both revenue and profit growth, leveraging their scale, multi-customer group approach, and value-added capabilities, particularly in large capital projects and HVAC. 3. Operational Execution and Productivity: Management emphasized disciplined cost management balanced with investments for future growth, aiming to drive productivity and maintain strong gross margins while expanding operating profit and diluted earnings per share.	Call Takeaway & ToneThe overall takeaway from Ferguson's Q2 2026 earnings call is that the company is successfully navigating a mixed market environment by leveraging its scale and strategic investments to drive market outperformance. Despite persistent residential headwinds, strong growth in non-residential segments, particularly large capital projects and HVAC, is fueling revenue and profit expansion. The tone was cautiously optimistic and confident, with management highlighting disciplined capital allocation, including significant M&A activity, and a focus on operational execution to capitalize on long-term structural tailwinds.	Prior Quarter'S Y/Y Growth By SegmentUS Waterworks: +14% (Decelerated). US Commercial Mechanical: +21% (Decelerated). US Industrial: Growth (unspecified) (Comparison not possible). US Facility Supply: Growth (unspecified) (Comparison not possible). US Fire and Fabrication: Growth (unspecified) (Comparison not possible). US Ferguson Home: +1% (Decelerated). US Residential Trade Plumbing: -4% (Accelerated to flat). US HVAC: -6% (Accelerated). Total US: +5.3% (Decelerated). Total Canada: +2.2% (Decelerated).	3 Things Analysts Most Pressed On (And Mgmt Responses)1. Large Capital Projects Outlook: Analysts questioned the sustainability and specifics of strong growth in large capital projects, particularly given tough prior-year comparisons. Management responded that they were pleased with the 15% growth in commercial mechanical and 18% in industrial, noting that large capital projects represent a mid-to-high single-digit percentage of total revenue and that backlogs and open orders continue to build, indicating a tailwind for the next couple of years. 2. Inflation Trends: Analysts inquired about the deceleration of inflation to low-single-digits and its quarter-to-date tracking. Management explained that finished goods inflation had compressed to the low-single-digit range as expected, while commodity prices, particularly PVC, remained in double-digit deflation, resulting in overall inflation in the upper portion of low-single-digits for the quarter. 3. Updated Guidance and Second Half Growth Drivers: Analysts asked if the raised revenue and operating margin outlook was primarily due to stronger year-to-date results and M&A, and what organic growth expectations were for the second half. Management clarified that their market expectations hadn't significantly changed, but better first-half performance and strong open orders supported expectations for a slightly stronger revenue growth rate in the second half, with Q3 growth anticipated to be better than Q2.	Revenue SegmentsTotal Sales: 4.6% year-over-year growth. Organic Growth: 3.8%. Acquisition Growth: 1%. US Sales: 5% (4% organic, 1% acquisition). Canada Sales: -1.9% (1.7% organic, -3.6% divestment). US Non-residential performance: 8%. US Residential market: 2%. US Waterworks: 3%. US Commercial mechanical: 15%. US Industrial: 18%. US Facility supply: 5%. US Fire and fabrication: -13%. US Ferguson Home: -1%. US Residential trade plumbing: relatively flat (0%). US HVAC: 11%.

2026-02-24 · 2025Q4 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
3 Things Management Is Most Focused On1. Capitalizing on Large Capital Projects and Structural Trends: Management is heavily focused on leveraging Ferguson's scale and multi-customer group approach to capture significant opportunities in large capital projects, such as data centers, and broader structural tailwinds in water infrastructure, climate and comfort, and aging housing stock. 2. Driving Organic Growth and Strategic M&A: Management emphasized their commitment to achieving above-market organic growth through continued investment in capabilities and greenfield expansions, alongside a healthy M&A pipeline, particularly in HVAC and value-added solutions like fabrication. 3. Sustaining Operating Margin Expansion and Productivity: Despite anticipating some gross margin normalization in the near term, management is focused on long-term operating margin expansion by driving operational efficiency, utilizing analytics and AI for productivity, and enhancing value-added services to customers.	Call Takeaway & ToneThe overall takeaway is that Ferguson is well-positioned to leverage its scale and multi-customer group approach to capitalize on durable, long-term structural trends in North American construction, particularly in large capital projects and essential water and air solutions, despite facing near-term challenges in residential and HVAC markets. Management expressed confidence in the company's ability to outperform the market, drive organic growth, and expand operating margins over the long term through disciplined execution and strategic investments. The tone of the call was cautiously optimistic and confident, acknowledging current market headwinds while emphasizing strong operational performance and robust future opportunities.	Prior Quarter'S Y/Y Growth By SegmentFor Calendar Q3 2025 (Ferguson's Fiscal Q1 2026): Total US revenue grew 5.3%. US Waterworks revenue was up 14%. US Commercial Mechanical revenue increased 21%. US Ferguson Home revenue grew 1%. US Residential Trade Plumbing revenue declined 4%. US HVAC revenue decreased 6%. Total Canada revenue grew 2.2%. US Fire and Fabrication, US Facility Supply, and US Industrial customer groups all saw growth (specific percentages not provided).	3 Things Analysts Most Pressed On (And Mgmt Responses)1. Non-residential Growth Outlook and Large Capital Projects: Analysts questioned the sustainability of the strong non-residential growth, particularly in large capital projects, and the competitive landscape. Management responded that this growth is driven by structural trends well-suited to Ferguson's multi-customer group approach, early project engagement, and supply chain capabilities, leading to strong share gains in Commercial/Mechanical and Waterworks. 2. 2026 Margin Outlook and Long-Term Expansion: Analysts inquired about the flattish operating margin guidance for 2026 despite expected revenue growth, and the long-term EBIT margin progression. Management explained that 2025 benefited from outsized gross margin gains that are normalizing, but they expect SG&A leverage to offset this, reiterating a long-term expectation of 10-30 basis points of annual operating margin expansion through value-added services and productivity. 3. M&A Strategy and Focus Areas: Analysts asked about the lower M&A contribution in 2025 and the strategic focus for future acquisitions. Management stated that while 2025 was lighter due to timing, the pipeline is healthy, and they expect 2026 to be more active. They are focusing on building out HVAC capabilities on the residential side and acquiring capabilities like fabrication and valve automation on the non-residential side to enhance construction productivity.	Revenue SegmentsFor Calendar Q4 2025: Net sales grew 3.6% year-over-year. Waterworks revenue was up 9%. Commercial/Mechanical customer group revenue increased 18%. Ferguson Home revenue was flat (0%). Residential Trade Plumbing revenue declined 4%. HVAC revenue decreased 7%. Overall residential revenue was down 2%, while nonresidential revenue was up 10%. Fire & Fabrication, Facilities Supply, and Industrial customer groups all saw continued growth (specific percentages not provided).

2025-12-09 · 2026Q1 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
3 Things Management Is Most Focused On1. Large Capital Projects & Data Centers: Management is leveraging its scale to capture high-growth non-residential projects, specifically data centers (which make up over 50% of their large project revenue) and onshoring/manufacturing. 2. HVAC & Dual Trade Strategy: Despite market headwinds, they are focused on their 'counter build-out' strategy (650 conversions) to serve the dual-trade contractor who handles both plumbing and HVAC. 3. Operational Efficiency & Margin Expansion: Management is focused on cost discipline and productivity, evidenced by raising their full-year operating margin guidance to 9.4%-9.6% despite a challenging residential backdrop.	Call Takeaway & ToneThe overall takeaway is that Ferguson is successfully pivoting toward large-scale non-residential and infrastructure projects to offset persistent weakness in the residential and HVAC markets. The company is significantly outperforming its end markets through its 'One Ferguson' scale and multi-customer group approach. The tone was disciplined, resilient, and cautiously optimistic; management expressed high confidence in their ability to gain share and expand margins even in a 'challenging' macro environment.	Prior Quarter'S Y/Y Growth By SegmentIn Q4 FY2025 (ended July 31, 2025), segment Y/Y growth was: US Waterworks: +6% (Accelerated to 14%); US Commercial Mechanical: +1% (Accelerated to 21%); US Ferguson Home: -4% (Accelerated to 1%); US Residential Trade Plumbing: -3% (Decelerated to -4%); US HVAC: +1% (Decelerated to -6%); Total US: +1.5% (Accelerated to 5.3%); Total Canada: -0.6% (Accelerated to 2.2%).	3 Things Analysts Most Pressed On (And Mgmt Responses)1. Data Center Revenue & Sustainability: Analysts asked for the size and 'lumpiness' of data center work. Mgmt responded that large projects are mid-to-high single digits of total revenue, with data centers being over half of that, and while lumpy, the bidding pipeline and open orders are growing. 2. Near-term Growth Slowdown: Analysts questioned the implied slowdown to ~3% growth for the remainder of the calendar year. Mgmt explained this is due to the lag in weak residential starts/permits and continued pressure in the HVAC market during the A2L refrigerant transition. 3. Pricing & Inflation Trends: Analysts asked about the step-up in inflation to 3%. Mgmt noted that while finished goods pricing is rising, commodity categories (like PVC) remain in deflation, though they expect a more 'normalized' pricing environment heading into 2026.	Revenue SegmentsUS Waterworks: +14%; US Commercial Mechanical: +21%; US Ferguson Home: +1%; US Residential Trade Plumbing: -4%; US HVAC: -6%; US Fire and Fabrication: Growth (unspecified); US Facility Supply: Growth (unspecified); US Industrial: Growth (unspecified); Total US: +5.3%; Total Canada: +2.2%.

Transcript Tidbits3 rows

2026-08-10

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Broader Themes Emerging	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)	Hiring
About Expanding Eligible MarketFerguson announced the acquisition of FloWorks, a leading industrial distributor and service provider of highly technical valves and flow control solutions, which is expected to increase Ferguson's total addressable market from $340 billion to $400 billion. This acquisition will expand Ferguson's specialty industrial flow control platform, adding technical depth in valves, automation, pumps, fluid handling systems, and specialty pipe fittings and flanges. FloWorks is also expected to enhance growth strategy with expanded end market and product exposure, adding significant recurring MRO-driven revenue, and allowing Ferguson to further engage with high-growth end markets like data centers, semiconductors, biotechnology and pharma, power generation, food and beverage, and general manufacturing. Other acquisitions year-to-date include Hamlett Environmental Technologies, expanding water and wastewater treatment capabilities; Carrier Great Lakes and Dealers Supply Company, expanding multi-brand HVAC offering and dual trade capabilities; New England Applied Products, expanding commercial mechanical capabilities for large capital projects; and PRD Technologies Group, strengthening the product portfolio with highly technical valves, flow control, and process equipment. Collectively, these eight announced acquisitions represent approximately $1.4 billion in aggregate annualized revenue and will expand capabilities across water and wastewater treatment, HVAC, and industrial valves and flow control.	About CompetitionFerguson continued to deliver market outperformance with both revenue and profit growth, driving meaningful share gains by leveraging its scale, multi-customer group approach, and value-added capabilities. The company's scale, breadth of products, diversified supply chain, and relationships with project stakeholders continued to drive market outperformance, particularly in commercial mechanical and industrial customer groups. Ferguson's HVAC growth strategy, including investment in dual trade, greenfield expansion, and acquisitions, also contributed to outperforming the market. The company believes it is a strong solution for the growing dual trade plumbing and HVAC contractor and for consolidators expanding trade professional networks. FloWorks is expected to enhance Ferguson's ability to drive market outperformance by playing an even larger part in the build-out across North America.	About The Broader IndustryThe market continues to be mixed and the economic environment remains uncertain. Strong activity in large capital projects offset softer activity in traditional non-residential work. The residential market returned to growth despite persistent headwinds in new construction and repair, maintenance, and improvement work. Markets in Canada remained challenging, especially in residential. The pace of inflation decelerated to low-single-digits, with finished goods inflation now in the low-single-digit range. Commodity prices, particularly PVC, remained in deflation, down about double-digits in the quarter, while commodities as a basket were about flat. The overall market expectation for the full year remains broadly flat, with residential markets expected to be down low-to mid-single-digits and non-residential markets up low-to mid-single-digits. Large capital construction projects, especially data centers, continue to drive non-residential activity, with good growth also seen in power generation, chemical, food and beverage, general manufacturing, mining and minerals, and water and wastewater treatment. Labor availability and overall supply chain pressure are key factors in meeting project timelines. Approximately one-third of the company's customer base is engaged in dual trade (plumbing and HVAC) work, a segment expected to grow over time.	Where Things Are HeadedFerguson has revised its full-year guidance upwards, now expecting net sales to grow mid-single-digits (up from prior low-to mid-single-digit expectations) and operating margin to be in the range of 9.5%-9.8%. This guidance does not yet include the FloWorks acquisition, which is expected to close in Q3, with updated guidance to follow. Interest expense is projected at approximately $200 million, CapEx at $375 million-$425 million, and an effective tax rate of approximately 26%. The company anticipates the large capital project space will continue to build and be a tailwind for the next couple of years. Revenue growth is expected to be stronger in the second half of the year, with Q3 growth rates anticipated to be stronger than Q2. Non-residential growth strength is expected to continue, and residential performance is projected to improve slightly, driven by the HVAC segment. HVAC inventory is expected to normalize by year-end, while large capital project inventory will continue to build. Ferguson expects to generate overall operating leverage for the year and deliver a strong operating margin performance.	Updates On ThemeAmericans	Broader Themes EmergingThe build-out of North American infrastructure, particularly large capital projects like data centers, semiconductors, biotechnology and pharma, power generation, food and beverage, and general manufacturing, is a significant emerging theme. Long-term growth drivers include water infrastructure, climate and comfort, and aging and under-built housing.	Bullish-Leaning Quotes (Short)Our associates continued to execute for our customers in the second quarter, delivering market outperformance with both revenue and profit growth. Sales of $8.8 billion increased 4.6% over prior year. Gross margin was strong at 31%. Operating profit increased 2.9% to $932 million. diluted earnings per share to $3.39. our balance sheet remains strong with net debt-to-EBITDA of 1.3x. upward revision of our full-year guidance. another strong quarter of non-residential performance with 8% growth. returned to growth in the residential market, up 2% in the quarter. Waterworks revenue grew 3%. Commercial mechanical grew 15%. industrial customer group performed very well with 18% growth. Growth accelerated in our HVAC customer group, with revenue up 11%. We expect the deal to be immediately accretive to adjusted earnings per share. We now expect net sales to grow mid-single-digits. We're also raising the lower-end of our operating margin guidance. July was a touch better than Q2.	Bearish-Leaning Quotes (Short)amid what continues to be a mixed market. While the economic environment remains uncertain... softer activity in traditional non-residential work. persistent headwinds across both new construction and repair maintenance and improvement work. fire and fabrication declined 13%. Ferguson Home declined 1%, and residential trade plumbing was relatively flat. Markets have remained challenging in Canada, particularly in residential. Gross margin was strong at 31%, down just 20 basis points against a tough comparison. PVC is still very much in deflation. we are about to comp against our strongest gross margin from last year. we would expect to be a bit down on that [gross margin]. We haven't seen a tremendous amount of improvement in that traditional core non-res activity like office, warehouse, to a lesser extent, around education and even hospitality.	HiringFerguson is excited to welcome the more than 1,000 talented FloWorks associates to the company. The company also brought in a trainee class of 200 associates in the summer and plans to bring in more trainees in September to fuel the pipeline of future talent and growth. Labor availability is noted as a factor in meeting project timelines.

2026-02-24

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)	Hiring
About Expanding Eligible MarketFerguson is aggressively expanding into large capital projects north of $400M in construction value, now representing mid-to-high single digits of total revenue; data centers account for over 50% of this segment. The company is expanding its HVAC footprint through the Moore Supply acquisition in Chicago and has completed 650 counter conversions to serve dual-trade (plumbing and HVAC) contractors. Waterworks is diversifying into public works, municipal meters, and geosynthetics, driving 14% growth.	About CompetitionThe company continues to outperform the broader market, with residential revenue down only 1% despite significant market weakness. Ferguson is leveraging its scale and the 'multi-customer group approach' to gain share in nonresidential sectors, which grew 12%. Management highlighted their ability to 'bring order to chaos' on complex projects as a key differentiator against competitors in a highly fragmented market they continue to consolidate through bolt-on acquisitions.	About The Broader IndustryThe residential sector remains challenged by weak housing starts, permit activity, and soft repair/remodel work. Conversely, the nonresidential sector is buoyed by large-scale manufacturing, data centers, and onshoring trends. The HVAC industry is navigating a complex transition to new A2L efficiency standards, which has caused some pull-forward demand and subsequent pressure on consumers. Commodity pricing is mixed, with PVC in double-digit deflation while copper and steel see modest inflation.	Where Things Are HeadedCalendar 2025 guidance called for about 5% revenue growth and margins of 9.4%–9.6%. For 2026, the company guides broadly flat markets with residential down low-to-mid single digits and nonresidential up low-to-mid single digits, aiming for low-to-mid single-digit revenue growth and operating margins of 9.4%–9.8%. CapEx of about $350–$400M, interest around $200M, and a ~26% tax rate are anticipated. The pipeline remains healthy, and the long-term growth algorithm targets 6%–11% revenue growth with 10–30bps annual margin expansion, driving toward a $40B revenue milestone and >$4B in adjusted operating profit. The strategy remains centered on the One Ferguson approach, expansion of Waterworks and data-center-related work, and ongoing acquisitions to consolidate fragmented markets.	Updates On ThemeHVAC:	Bullish-Leaning Quotes (Short)Nonresidential revenue up 12% during the quarter; Our open order volume on large capital projects does continue to grow; Commercial mechanical customer group grew 21%; We remain confident in our markets over the medium term.	Bearish-Leaning Quotes (Short)Residential end markets remain challenged; HVAC declined by 6%; New residential housing starts and permit activity have been weak; PVC is still in deflation, down in the double-digit range.	HiringNo explicit hiring initiatives were announced; leadership note includes Pete Kennedy's promotion to Vice President of Investor Relations. The company mentions ~35,000 associates and an expansive field staff across 1,679 branches, but no major headcount changes aside from leadership movement.

2025-12-09

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Broader Themes Emerging	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)	Hiring
About Expanding Eligible MarketFerguson is aggressively expanding into large capital projects (north of $400M construction value), which now represent mid-to-high single digits of total revenue. Data centers specifically account for over 50% of this segment. The company is also expanding its HVAC footprint through the acquisition of Moore Supply Company in Chicago and has completed 650 counter conversions to serve 'dual trade' (plumbing and HVAC) contractors. Waterworks is diversifying into public works, municipal meters, and geosynthetics, driving 14% growth.	About CompetitionThe company continues to outperform the broader market, with residential revenue down only 1% despite significant market weakness. Ferguson is leveraging its scale and 'multi-customer group approach' to gain share in nonresidential sectors, which grew 12%. Management highlighted their ability to 'bring order to chaos' on complex projects as a key differentiator against competitors in a highly fragmented market they continue to consolidate through bolt-on acquisitions.	About The Broader IndustryThe residential sector remains challenged by weak housing starts, permit activity, and soft repair/remodel (RMI) work. Conversely, the nonresidential sector is buoyed by large-scale manufacturing, data centers, and onshoring trends. The HVAC industry is currently navigating a complex transition to new A2L efficiency standards, which has caused some pull-forward demand and subsequent pressure on consumers. Commodity pricing is mixed, with PVC in double-digit deflation while copper and steel see modest inflation.	Where Things Are HeadedFor the full calendar year 2025, Ferguson expects approximately 5% revenue growth and operating margins between 9.4% and 9.6%. Near-term growth is expected to moderate to roughly 3% in Q4 2025 due to continued residential and HVAC pressure. However, management remains bullish on the medium-term outlook, citing structural tailwinds from an underbuilt US housing market and a robust pipeline of large capital projects heading into 2026.	Updates On ThemeHVAC:	Broader Themes EmergingData center infrastructure demand (AI-driven); Onshoring and Reshoring of manufacturing; Modular construction techniques in large-scale projects.	Bullish-Leaning Quotes (Short)"Nonresidential revenue up 12% during the quarter."; "Our open order volume on large capital projects does continue to grow."; "Commercial mechanical customer group grew 21%."; "We remain confident in our markets over the medium term."	Bearish-Leaning Quotes (Short)"Residential end markets... remain challenged."; "HVAC declined by 6%... market's in a pretty tough spot."; "New residential housing starts and permit activity have been weak."; "PVC... is still in deflation. Down in the double digit range."	HiringFerguson continues to invest in its foundational trainee program, adding 250 to 300 trainees this year with plans to expand in 2026. The company is also focused on training associates for 'dual trade' expertise to support HVAC/Plumbing counter conversions. While cost actions were taken earlier in the year, the company is currently hiring to fuel the pipeline of talent for future growth.

NotesTable

Date	Comment	Comment Type	Comment Sentiment	Link	Price Reaction
2026-02-24	Ferguson reported strong FY25 results, driven by robust non-residential growth offsetting residential weakness. FY26 guidance projects low to mid-single-digit revenue and 9.4-9.8% operating margin, with Q1 starting softer. The market perceived this positively, with the stock outperforming SPY by 3.46% (4.19% vs 0.73%). Investors likely focused on the strong non-residential momentum, expanded large capital projects TAM, and reaffirmed long-term margin expansion, despite near-term headwinds.	Earnings Transcript	Neutral		+4.19% (vs SPY: +3.46%)

Upcoming Events3 rows

Catalyst ID	Estimated Timing	Estimated Date Start	Estimated Date End	Catalyst	Why It Matters	Ticker Or Theme Specific	Transcript Date	Source Type
FERG_9c5079e0	alongside our Q3 earnings	2026-10-01	2026-11-30	Ferguson to update its full-year 2026 guidance to reflect the expected FloWorks acquisition.	This will provide a clearer financial outlook for the company, incorporating the significant impact of the FloWorks acquisition on sales, margins, and earnings per share.	Ticker	2026-08-10	earnings_transcript
FERG_0237cc80	in our third quarter	2026-07-01	2026-09-30	Completion of the acquisition of FloWorks, a leading distributor of highly technical valves and flow control solutions.	This is one of Ferguson's largest acquisitions, expected to be immediately accretive to adjusted EPS, increase total addressable market from $340 billion to $400 billion, and enhance growth strategy with expanded end market and product exposure.	Ticker	2026-08-10	earnings_transcript
FERG_eae52a86	as we move throughout the year	2026-03-01	2026-12-31	Stabilization and eventual recovery of the residential end markets, including the alleviation of pressure in the HVAC segment as the industry navigates new efficiency standards.	Residential markets represent approximately half of Ferguson's revenue. A recovery would remove a significant headwind, contribute to overall revenue growth, and potentially allow the company to achieve the higher end of its 2026 guidance.	Ticker	2026-02-24	earnings_transcript