Ferguson: Stay Buy Rated As The Earnings Growth Runway Remains Clear
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Redfox Capital Ideas651 FollowersFollow5ShareSavePlay(8min)Comment(1)SummaryFerguson (FERG) remains a buy, supported by robust pricing power, mega-project tailwinds, and a visible earnings growth runway. FERG's Q1 2026 saw net sales up 5.1% y/y, gross margin expand 60 bps, and adj. EPS rise 16% to $2.84. Pricing gains are now driven by finished goods, providing stickier, more sustainable margin expansion versus prior commodity-driven cycles. Mega-projects, now ~10% of sales, are driving non-residential growth and underpin a credible path to >10% EPS CAGR and 15% stock upside. Erik Isakson/DigitalVision via Getty Images Investment summary My previous investment thought on Ferguson (FERG) was a buy rating given the tangible signs of demand and pricing recovery. I reiterate my buy rating, as the latest quarter shows more proofThis article was written byRedfox Capital Ideas651 FollowersFollowI focus on long-term investments while incorporating short-term shorts to uncover alpha opportunities. My investment approach revolves around bottom-up analysis, delving into the fundamental strengths and weaknesses of individual companies. My investment duration is the medium to long-term. Ultimately, I aim to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow sustainable is FERG's recent pricing power and margin expansion?Pricing gains are driven by finished goods, not commodities, making them stickier; management expects no material giveback and further price step-ups in spring 2026.Recommended For You