reports
- Denise Molina
Ferguson Is Running a Tighter, More Focused Strategy Relative to Previ...
Following no-moat Ferguson's third-quarter results, we are maintaining our GBX 4,500 and USD 5.90 fair value estimates for the local and ADR shares, respectively. Earlier this year, management lowered expected organic growth for the year, citing a slowdown in the U.S., the company's largest market. This downturn in growth was visible in Ferguson's third-quarter results, with the U.S. year-over-year organic growth slowing to 3%, about one third of the growth rate achieved in the first two quarter...
- Denise Molina
Ferguson's 3Q Shows Softening in U.S. Demand As Expected; Shares Fairl...
Following no-moat Ferguson's third-quarter results, we are maintaining our GBX 4,500 and USD 5.90 fair value estimates for the local and ADR shares, respectively. Earlier this year, management lowered expected organic growth for the year, citing a slowdown in the U.S., the company's largest market. This downturn in growth was visible in Ferguson's third-quarter results, with the U.S. year-over-year organic growth slowing to 3%, about one third of the growth rate achieved in the first two quarter...
- Denise Molina
Ferguson Lowers Guidance for Full Year on Weaker Demand; Shares Richly...
No-moat Ferguson announced first-half results that were relatively strong but surprised the market by lowering guidance for the full year. We had been forecasting a slowdown this year and are maintaining our forecasts and GBX 4,500 and $5.90 fair value estimates for the local and ADR shares, respectively. The shares look richly valued. New guidance for the full year implies a second-half slowdown in organic revenue growth to between negative 0.5% and positive 3.5% from 6.5% in the first half. O...
- Denise Molina
Ferguson's Divestments Improve Its Longer Term Midcycle Margin
While Ferguson's full-year results were in line with expectations, we think the stock sold off on concerns about tougher comparables in 2019 and the inevitable turn in the remodeling cycle. We see no indications of the cycle softening for U.S. construction; however, we think the stock has more than priced in the recent value drivers, namely taking share in the U.S., showing more discipline in branch pricing, and importantly, exiting much of its international portfolio. We retain our no-moat rati...
- Denise Molina
Ferguson FY18: No Signs of U.S. Slowdown but Margins Unlikely to Expan...
While Ferguson's full-year results were in line with expectations, we think the stock sold off on concerns about tougher comparables in 2019 and the inevitable turn in the remodeling cycle. We see no indications of the cycle softening for U.S. construction; however, we think the stock has more than priced in the recent value drivers, namely taking share in the U.S., showing more discipline in branch pricing, and importantly, exiting much of its international portfolio. We retain our no-moat rati...
- Denise Molina
Ferguson Is Increasingly Becoming a Pure-Play U.S. Distributor; Shares...
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 s...
- Denise Molina
Ferguson is increasingly becoming a pure-play U.S. distributor.
Ferguson's fourth-quarter and full-year fiscal 2017 results continued impressive growth in the U.S., while the U.K. division continues to demonstrate that it is value-dilutive. The company has been systematically trimming its international exposure, with the Nordic businesses up for sale and the U.K. scaled down in terms of branches. This strategy means the U.S. now contributes 90% of the group profits. The company has not yet flagged the U.K. as a division for sale, but we think it could be a p...
- Denise Molina
Ferguson's U.K. Business Continues to Look Value-Dilutive
Ferguson's fourth-quarter and full-year fiscal 2017 results continued impressive growth in the U.S., while the U.K. division continues to demonstrate that it is value-dilutive. The company has been systematically trimming its international exposure, with the Nordic businesses up for sale and the U.K. scaled down in terms of branches. This strategy means the U.S. now contributes 90% of the group profits. The company has not yet flagged the U.K. as a division for sale, but we think it could be a p...
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