Ferguson Is Increasingly Becoming a Pure-Play U.S. Distributor; Shares Fully Priced
We are increasing our fair value estimate for Ferguson to GBX 4,300 per share from GBX 3,400 due to three factors: rolling our model forward to fiscal 2018, incorporating our coveragewide expectation of a U.S. federal statutory tax rate reduction from 35% to 25% in 2018, and adjusting for the sale of the margin-dilutive Nordic business. Our EBIT forecasts in U.S. dollar terms for fiscal 2018 and 2019 are 1% and 4% below consensus. We continue to see the shares as overvalued, with the current sh...Ferguson Plc, formerly Wolseley plc, is a Switzerland-based holding company. The Company is engaged in the distribution of plumbing and heating products and building materials. The Company's segments include USA, UK, Nordics, and Canada and Central Europe. The Company operates seven business units in the United States, six of these mainly operate in the business to business (B2B) market with one operating in the business to consumer (B2C) market. The Company, through Wolseley UK, operates approximately three businesses in the B2B market and has over 737 branches covering the whole country. The Nordic region consists of five businesses that operate a total of approximately 256 branches across over four countries, supported by approximately five distribution centers. The Company's businesses serve residential repair, maintenance and improvement (RMI) and new construction markets. Ferguson Enterprises, Inc (Ferguson) is the Company's primary brand in the USA segment.
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