reports
- Denise Molina
Morningstar | Ferguson Is Running a Tighter, More Focused Strategy Rel...
Ferguson's portfolio trimming has improved its longer term prospects with divestments over the past couple of years margin and return dilutive international assets. With a high proportion of fixed costs, group margins are still likely to be volatile with swings in the U.S. housing cycle, but the midcycle margin has improved. Roughly 90% of Ferguson's profits come from its U.S. business, which is a well-scaled distributor of plumbing supplies, including a chain of branches across the United State...
- Denise Molina
Morningstar | Ferguson's 3Q Shows Softening in U.S. Demand As Expected...
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
Morningstar | FERGY Updated Star Rating from 26 Mar 2019
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
Morningstar | Ferguson Lowers Guidance for Full Year on Weaker Demand;...
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
Morningstar | Ferguson Stepping Up Capital Allocation on Acquisitions;...
Our main takeaways from Ferguson's fiscal 2019 first-quarter results were (1) U.S. organic revenue is holding up, although we are still modelling in about half the growth this year versus last to reflect the natural turn in the new construction and remodelling cycle, (2) cost inflation, including 4% on labour, continues to prevent meaningful operating leverage benefits from high-single-digit revenue growth with EBIT margins stable at around 7%, and (3) the company is more aggressively allocating...
- Denise Molina
Morningstar | Ferguson's Divestments Improve Its Longer Term Midcycle ...
Ferguson's portfolio trimming has improved its longer term prospects with divestments over the past couple of years margin and return dilutive international assets. With a high proportion of fixed costs, group margins are still likely to be volatile with swings in the U.S. housing cycle, but the midcycle margin has improved. Roughly 90% of Ferguson's profits come from its U.S. business, which is a well-scaled distributor of plumbing supplies, including a chain of branches across the United State...
- Denise Molina
Morningstar | Ferguson FY18: No Signs of U.S. Slowdown but Margins Unl...
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...
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