About Ferguson Enterprises Inc.

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers.

In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.

FERG operates in the Wholesale Trade | Wholesale | headquartered in NEWPORT NEWS, Virginia | approximately 35,000 employees | led by CEO Kevin M. Murphy.

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## Investment Thesis Ferguson Enterprises Inc. /DE/ (FERG) currently ranks **#12** in our coverage universe of 3,571 U.S.-listed equities, with a composite score of **79.9/100**. This places the stock in our **"Strong Buy"** category based on our proprietary six-factor quantitative model. The bull case rests on three pillars: exceptional profitability (Quality score: 96/100), favorable market dynamics (Momentum: 82/100), and reasonable valuation relative to quality (Value: 56/100). Our model, built on 46 peer-reviewed academic studies, identifies these factor combinations as historically predictive of outperformance. The central question for investors: **Is FERG's quality premium justified by its growth trajectory, or has the market already priced in perfection?** --- ## Company Overview Ferguson Enterprises Inc. /DE/ operates in the **Consumer Staples** sector and has demonstrated modest revenue growth of 5.1% over the trailing twelve months. The company converts 7.0% of revenue into net income, a margin profile with room for improvement. At $48.9B, FERG is a large-cap stock with established market position and diversified revenue streams. --- ## Our Six-Factor Analysis Our proprietary model evaluates every stock across six factors, each backed by peer-reviewed academic research. Here's how FERG scores: ### Quality Score: 96/100 ★★★★★ **What we measure:** Return on equity, return on assets, gross margin, net margin, earnings consistency, and accruals quality. FERG generates a return on equity of **39.4%**, exceptional by any standard and indicative of a highly efficient capital structure. Gross margin of **30.7%** reflects competitive industry dynamics. Net margin of **7.0%** leaves limited room for margin compression. **Academic evidence:** Research by Novy-Marx (2013) demonstrates that quality stocks outperform by 4-6% annually over long periods, even after controlling for market beta. --- ### Value Score: 56/100 ★★★ **What we measure:** P/E, P/B, P/S, EV/EBITDA, and free cash flow yield relative to sector and historical norms. FERG trades at **24.98x earnings**, a reasonable valuation that provides some margin of safety. Price-to-book of **8.07x** reflects significant intangible value and growth expectations. **Academic evidence:** Fama and French (1992) established that value stocks (low P/B, P/E) outperform growth stocks by 3-5% annually, though this premium has compressed in recent years. --- ### Momentum Score: 82/100 ★★★★★ **What we measure:** 12-month price momentum, revenue growth acceleration, earnings surprise frequency, and relative strength. Revenue growth of **5.1%** reflects mature market conditions. Our timing model assigns a score of **56.1309035541956/100** with a **Favorable** signal, suggesting neutral timing. **Academic evidence:** Jegadeesh and Titman (1993) documented that stocks with strong 6-12 month momentum continue to outperform over the subsequent 3-12 months, generating 1%+ monthly alpha. --- ### Investment Score: 99/100 ★★★★★ **What we measure:** Asset growth, capital expenditure intensity, acquisition activity, and capital allocation discipline. An investment score of 99/100 suggests FERG is deploying capital effectively to drive future growth. **Academic evidence:** Titman, Wei, and Xie (2004) found that companies with high asset growth subsequently underperform, suggesting capital discipline matters. --- ### Stability Score: 31/100 ★★ **What we measure:** Beta, earnings volatility, balance sheet strength, debt levels, and cash flow consistency. Beta of **1.07** indicates market-level volatility. Debt-to-equity of **0.7%** reflects a conservative capital structure with ample financial flexibility. **Academic evidence:** Low-volatility stocks have historically outperformed high-volatility stocks on a risk-adjusted basis—a phenomenon known as the "low-volatility anomaly" (Baker, Bradley, Wurgler 2011). --- ### Short Interest Score: 98/100 ★★★★★ **What we measure:** Days to cover, short interest as percentage of float, and short interest trend. A short interest score of 98/100 indicates limited bearish positioning. --- ## Economic Moat Assessment Based on our analysis of profitability metrics, competitive positioning, and sustainability of returns, we assess FERG's economic moat as follows:

Moat Type	None
Moat Width	Narrow
Uncertainty	High

- Exceptional profitability metrics suggest pricing power --- ## Fair Value Estimate We employ a reverse discounted cash flow methodology to estimate fair value, working backward from the current price to determine what growth assumptions are implied. ### Three-Scenario Analysis

Scenario	Implied Fair Value	Upside/Downside	Assumptions
Bear	$29.4B	-39.9%	Assumes 8% 5-year growth, 18x terminal P/E, 12% discount rate
Base	$53.5B	+9.5%	Assumes 12% 5-year growth, 25x terminal P/E, 10% discount rate
Bull	$93.1B	+90.5%	Assumes 18% 5-year growth, 32x terminal P/E, 9% discount rate

### Probability-Weighted Expected Return Assuming 20% bear, 50% base, and 30% bull probability weights: **Expected Return: 23.9%** --- ## Peer Comparison How does FERG stack up against sector peers?

Company	BCR Score	P/E	ROE	Net Margin
FERG (This Stock)	79.9	24.98	39.4%	7.0%
ITRN	80.4	11.40	30.4%	16.8%
GWW	80.1	26.35	32.2%	6.9%
SEB	79.9	9.05	6.8%	4.3%
MNST	79.7	38.06	27.7%	23.9%
DPZ	79.4	26.61	-17.6%	12.2%

FERG's score is competitive with sector peers. --- ## Risk Factors Every investment carries risk. Here are the key risks for FERG: ### Valuation Risk ⚡ MODERATE The current valuation leaves limited margin of safety for execution missteps. ### Competitive Risk ⚡ MODERATE Competitive dynamics in this sector require ongoing investment and strategic adaptation. ### Execution Risk ⚠️ HIGH Below-average stability scores suggest earnings volatility and potential execution challenges. ### Macro Risk ⚡ MODERATE All equities are subject to macroeconomic conditions including interest rates, inflation, and economic growth. A recession could impact earnings regardless of company-specific quality. --- ## Financial Deep Dive ### Income Statement Analysis **Gross Margin: 30.7%** — Compressed margins suggest competitive industry dynamics. **Operating Margin: 9.4%** — Room for operational improvement. **Net Margin: 7.0%** — Limited profit conversion. ### Balance Sheet Analysis **Debt-to-Equity: 0.7%** — Conservative leverage with ample financial flexibility. **Return on Equity: 39.4%** — Exceptional capital efficiency—top decile performance. ### Cash Flow Indicators **Revenue Growth: 5.1%** — Steady growth reflecting mature market position. --- ## Investment Decision Framework ### Who Should Buy FERG? ✅ **Long-term investors** seeking quality exposure ✅ **Factor investors** targeting quality and momentum ✅ **Portfolio builders** needing Consumer Staples sector exposure ### Who Should Avoid FERG? ❌ **Deep value investors** seeking bargain prices ❌ **Short-term traders** seeking high volatility ### Position Sizing Recommendation Based on our factor profile and risk assessment: | Portfolio Size | Suggested FERG Weight | |----------------|---------------------------| | $10,000 | $800 - $1,200 | | $100,000 | $8,000 - $12,000 | | $1,000,000 | $80,000 - $120,000 | --- ## The Bottom Line Ferguson Enterprises Inc. /DE/ represents **a compelling investment opportunity** based on our six-factor quantitative analysis. The company's quality metrics are exceptional, while its valuation is fair. Our fair value analysis suggests **upside potential of 10%** under base-case assumptions, with probability-weighted expected returns of **24%**. We recommend accumulation, particularly on any pullbacks that improve the risk-reward profile. ---

--- ## Methodology Disclosure This analysis is based on the Blank Capital Research six-factor quantitative model, which evaluates securities across Quality, Value, Momentum, Investment, Stability, and Short Interest factors. Factor weights are derived from 46 peer-reviewed academic studies and calibrated to current market conditions. Our fair value estimates employ reverse discounted cash flow analysis, working backward from market price to implied growth assumptions. This methodology is inherently uncertain and should be considered as one input among many in investment decisions. --- *This report was generated on Monday, February 16, 2026. The analysis reflects data as of that date. Past performance does not guarantee future results. This is not investment advice. Blank Capital Research may hold positions in securities mentioned.*