Ferguson Stock Soars On Strong Q3 Growth, Margin Gains And Upbeat Guidance

by Lekha Gupta Benzinga Editor

Zinger Key Points

Ferguson reported strong Q3 net sales of $7.62 billion, beating consensus, and adjusted EPS of $2.50, also exceeding estimates.
The company revised its FY25 net sales growth outlook to low-to-mid-single digits and increased its adjusted operating margin guidance.
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Ferguson Enterprises Inc. FERG shares are trading higher premarket on Tuesday after the company reported third-quarter results.

The company reported net sales of $7.62 billion, up 4.3% year over year (Y/Y), beating the consensus of $7.42 billion.

Net sales growth was driven by organic revenue growth of 5.0% Y/Y and acquisition growth of 1.0% Y/Y in the quarter.

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The company witnessed improvement in finished goods pricing, offset by persistent weakness in certain commodity categories, which led to overall flat pricing for the quarter.

Net sales in the U.S. business increased by 4.5% Y/Y, while that in Canada decreased by 0.3% Y/Y in the quarter.

Gross margin expanded by 50 basis points Y/Y to 31% in the third quarter. Adjusted operating margin improved 20 basis points to 9.4% in the quarter.

Adjusted EBITDA rose 6.6% Y/Y to $770 million in the quarter. Adjusted EPS of $2.50 (+7.8% Y/Y) beat the consensus of $2.02.

As of April 30, the company’s net debt stood at $3.59 billion.

The company declared a quarterly dividend per share of 83 cents, payable on August 6 to stockholders of record as of June 20, 2025.

Ferguson repurchased $251 million in shares during the quarter, leaving around $1.1 billion remaining under its current share repurchase program.

The company has taken targeted steps to streamline operations, which led to $68 million in non-recurring charges this quarter.

Ferguson projects to generate about $100 million in annualized savings.

Ferguson revised the outlook for net sales growth to low-to-mid-single digit (vs. low-single-digits prior), adjusted operating margin to 8.5% – 9.0% (from 8.3% – 8.8% earlier), and capital expenditures to $300 – $350 million (from $325 million – $375 million prior).

CEO Kevin Murphy expressed confidence in the company’s markets over the medium term, citing multiyear tailwinds in both residential and non-residential sectors.

Investors can gain exposure to the stock via Invesco Water Resources ETF PHO and Global X Clean Water ETF AQWA.

Price Action: FERG shares are trading higher by 13.7% to $204.98 premarket at last check Tuesday.

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