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Ferguson’s FY22/23 performance was slightly ahead of market expectations. The group’s organic sales came in at +1.5% yoy (vs consensus of +1.0%), led by the market share gains in the US segment. As expected, both the residential and non-residential businesses softened further. Adjusted operating profit was 2.7% ahead of consensus, with the margin at the top-end of management’s guidance. We believe the FY23/24 outlook is achievable and we will slightly raise our financial estimates. Positive reco
Companies: Ferguson Plc
AlphaValue
Ferguson’s Q3 FY22/23 performance was largely in line with the street’s expectations ¬– revenue and adjusted EPS were 0.8%% and 1.9% ahead of consensus. The US residential sector remained in the red (-6% yoy) and non-residential remained in the black. The slump in Canadian profitability was worse than we had expected. While we expect the near-term pressure to continue, the company should continue to gain market share. We maintain our positive stock recommendation.
Ferguson’s Q2 FY23 performance was in line with our estimates but below the street’s expectations. Although the group’s organic revenue grew 2.7% yoy, the adjusted EPS of $1.91 was 5% below the consensus. The weakness in the residential segment was offset by non-residential in the US. We expect organic sales to soften further in H2 FY22/23, as the volume will remain in the red and price inflation moderates gradually. Management should be able to walk the talk (guidance). Positive recommendation
There were no surprises in Ferguson’s FY21/22 performance – both organic sales and adjusted operating margin were in-line with market expectations. However, the final dividend of $1.91 per share was below consensus. Although Ferguson has clocked up a good start to Q1, we expect FY22/23 performance to come under pressure due to a tough comparable base and softening customer demand (especially during H2). We will trim the financial estimates slightly but continue to see Ferguson as solid business
Ferguson’s Q3 performance was ahead of our as well as the market’s expectations. The sales momentum was once again led by the US, and has continued in the current quarter. Despite the strong margin improvement, we expect tougher times ahead. Higher inflationary headwinds are likely to dent the end-consumer demand gradually. Despite being a healthy business, the stock price is likely to remain under pressure in the near term.
Ferguson’s Q1 FY21/22 performance was ahead of our as well as market expectations. While organic revenue grew 24.5%, the adjusted EBIT surged 58.5% during the quarter. We expect the company to continue gaining market share, even if the inflation-led tailwinds moderate in the coming times. Although the profitability is likely to soften in the near term, it should also witness a gradual improvement in subsequent years. We will improve the financial estimates and target price.
Ferguson reported better-than-expected FY20/21 results, with revenue coming in >14% higher, driven by robust residential demand and the recovery in commercial and industrial end-markets. Superior operational performance supported profitability with underlying trading profit outpacing revenue growth. FY20/21 dividend was raised by c.15%, while a $1.0bn share buy-back programme was announced. Ferguson sees healthy sales momentum in the near term, but flagged a tough comparable in H2 with inflation
Canaccord Genuity
Ferguson’s Q3 FY20/21 results came in ahead of market expectations. Organic sales growth of c.21% was a result of the strong US residential market, with trading profit further benefiting from a combination of factors, including a favourable channel sales mix and operational improvements. Management raised its FY20/21 outlook on the back of a strong Q3 and early-May momentum. While we will raise our estimates, the recommendation should remain unchanged given the company’s expensive valuation and
Ferguson reported H1 FY20/21 results which were largely in line with market expectations. Organic revenue growth of >3% was aided by robust residential markets, while trading profit also improved, benefiting from cost control measures such as store closures and headcount reduction. Management remains cautious about H2 citing uncertainties, but still expects a market outperformance. The interim dividend was raised to $0.729 per share, and the company also announced the resuption of the share buy-
Ferguson has announced the disposal of the UK business for $420m. While we were expecting a higher price tag (c.$600m), the deal is unlikely to be a needle-mover due to the insignificant size of this segment (accounts for c.2% of the group’s valuation). However, this sale is a step in the right direction from a strategic perspective.
Ferguson kicks off FY20/21 strongly with a 3.1% increase in the top line and c.4x growth in operating profit, benefiting from the cost-cutting actions related to labour and branches – most of these are recurring in our view. For the full year, management remains cautious amidst the COVID-19 pandemic but has reiterated its guidance of outperforming the US Plumbing & Heating market, which is likely to remain flat. Bolt-on M&As, which resumed from this quarter, are also likely to continue in FY20/2
Ferguson closed its FY19/20 books (ending in July 2020) on a good note, as its trading/operating profit outpaced the resilient top-line, on the back of a healthy US performance and several temporary and permanent cost-cutting measures across the group. Moreover, management has announced it is to pay the full-year dividend (including the previously suspended interim instalment) and resume M&As. Also, while the de-merging process of the UK business carries on, the board is also now exploring other
Ferguson has shown good resilience in the COVID-19 pandemic – after losing c.10% of its sales in April, it ceded just c.1% of revenue in the following three months. This was mainly attributable to its strong digital capabilities and gradual re-opening of stores amidst relaxed lockdown restrictions. However, we maintain a cautious view on its FY20/21 performance, as the full impact of recent softness in the US housing / construction activity should be seen in Ferguson’s top-line with a 3-6 months
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