Ferguson Leverages Infrastructure Demand Amid Housing Market Challenges

Ferguson

UNITED STATES: Ferguson, America’s leading plumbing distributor, reported robust demand from infrastructure and municipal projects even as a sluggish housing market and margin pressures weighed on overall returns. For the year ending October 9, 2025, Ferguson’s net sales reached US$30.8 billion, up 3.8% from the previous year, with organic growth of 3.2% and acquisitions contributing 1%. Q4 saw Waterworks sales rise 12% and HVAC sales 5%, reflecting strong non-residential demand, while management targets mid-single-digit organic growth supported by ongoing M&A, distribution center investments, and stabilizing commodity prices. 

The company maintains a strong financial profile, with ROIC at 21.44%, operating margins near 8.5%, net debt to EBITDA of 1.16x, and a free cash flow yield of 3.77%, underpinning US$690 million in Q3 shareholder returns. Analysts view Ferguson as having a narrow moat due to scale and supplier relationships, while the stock trades at a forward P/E of 23.9x and EV/Sales of 1.55x, below market averages. Key risks include continued weakness in housing, margin compression from commodity deflation, and cyclicality in commercial construction, though infrastructure spending and disciplined acquisitions provide growth opportunities. 

Source: Finimize