Ferguson Enterprises Inc. (FERG) Stock Drops 6% Despite Strong Earnings Growth

TLDR:

• Ferguson’s stock drops 6.35%, but earnings rise 15.9% in Q1.

• FERG sees 5% growth in net sales, driven by non-residential markets

• Ferguson confident in 2025 despite a challenging economic environment.

• Strong earnings and acquisitions boost Ferguson’s market outlook for 2025.
• Ferguson’s stock dips, but Q1 growth and dividends impress investors.

Ferguson Enterprises Inc. (FERG) saw a significant drop in its stock price by 6.35%, reaching $230.20 as of 12:49 PM EST.

Ferguson plc, FERG

The company posted strong quarterly financial results. The dip came amid solid revenue growth, robust earnings per share (EPS) gains, and a positive outlook for the upcoming year.

Strong Earnings Growth Amid Challenging Market Conditions

Ferguson reported a 5.1% increase in net sales, reaching $8.2 billion for the quarter ending October 31, 2025. This performance was driven by a 4.2% organic revenue growth and a 1.0% contribution from acquisitions. The company’s gross margin improved by 60 basis points, reaching 30.7%, while its operating profit rose by 15.9%, amounting to $771 million. Adjusted diluted EPS also climbed by 15.9% to $2.84, reflecting higher operating profit and the impact of share repurchases.

CEO Kevin Murphy expressed confidence in the company’s continued market outperformance, despite a challenging economic environment. He noted that the company’s business model allows for ongoing investments in growth, as well as market consolidation. Murphy also highlighted the company’s strong financial position and its ability to return capital to shareholders while maintaining a solid balance sheet.

Non-Residential Markets and Acquisitions Drive Performance

Ferguson’s non-residential markets performed well, particularly in waterworks and commercial mechanical services. The company saw a 12% growth in its non-residential revenue, driven by strong demand for large capital projects. Residential markets, however, remained subdued, with a 1% decline in revenue despite a 4.4% organic growth. Ferguson completed one acquisition during the quarter, acquiring Moore Supply Company, an HVAC equipment and supplies business based in Chicago.

The company’s acquisition strategy has bolstered its position in key markets, with ongoing investments expected to contribute to future growth. Despite weak residential market conditions, Ferguson remains well-positioned to capitalize on the long-term growth in the non-residential sector. The company’s diverse portfolio, strong market share, and expertise have helped it weather the storm of a challenging market landscape.

Solid Financials and Positive Outlook for 2025

Ferguson’s balance sheet remains robust, with a net debt to adjusted EBITDA ratio of 1.1x. The company repurchased $208 million worth of shares during the quarter, supporting shareholder returns. Ferguson also declared a quarterly dividend of $0.89, reflecting a 7% increase from the previous year. The dividend will be paid to shareholders on February 27, 2026.

Ferguson provided an updated guidance for the full year 2025, forecasting a 5% growth in net sales. The company also expects its adjusted operating margin to remain between 9.4% and 9.6%. Despite uncertainties in the market, Ferguson is confident in its ability to deliver strong performance in 2025, leveraging its business scale and market expertise to continue outpacing competitors.

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