Interactive Investor

ii view: US plumber Ferguson gushes to new high after results

7th December 2021 15:25

Keith Bowman from interactive investor

Having previously sold its UK business, its primary listing could go stateside. We assess prospects. 

First-quarter results to 31 October

  • Net sales up 26.6% to $6.8 billion (£5.2 billion)
  • Operating profit up 64% to $739 million (£562 million)
  • Completed $97 million of a $1 billion share buy-back programme

Chief executive Kevin Murphy said:

"Our associates have continued to drive strong market share gains while navigating industry supply chain pressures, delivering particularly strong profit growth. We are pleased with earnings growth that significantly outpaced revenue growth to generate strong operating leverage, demonstrating the agility of our business model.”

ii round-up:

North American distributor of plumbing and heating products Ferguson (LSE:FERG) today lifted its full-year forecasts as it reported a buoyant first quarter. 

Net sales rose by just over a quarter to $6.8 billion, helping operating profit gain by 64% to $739 million. Ferguson sold it UK Wolseley business earlier in 2021 for $420 million.

The plumbing group’s shares rose by over 5% in UK trading to a record high, leaving them up by just over a third year-to-date. That compares to gains of around 22% for the broad US S&P 500 index, and by 13% for the FTSE 100 index.

Ferguson shares also began trading additionally on the New York Stock Exchange in early March as part of its move to trade solely in North America. 

Organic quarterly sales growth of 24.5% compared to a gain of 23.6% in the prior fourth quarter. US revenue grew 27% to $6.42 billion, while revenue for its much smaller Canadian business climbed by almost a fifth to $385 million. 

In May, it returned the sale proceeds of its UK Wolseley sale via a special dividend. It has made four bolt-on North American acquisitions since the start of the financial year generating annualised revenues of $125 million.

Price inflation rose into the low teens during the quarter with its strong management of costs aiding the generation of profit growth.

Despite upping full-year expectations, management gave no full-year forecasts.  

ii view:

FTSE 100 constituent Ferguson sells all sorts of products from underground infrastructure to plumbing, appliances, lighting, and heating, ventilation and air conditioning items. Employing over 30,000 people, it operates from more than 1,600 locations across North America. 

For investors, a potential primary US stock market listing for Ferguson may not suit all. Some UK-only investment funds may have to sell. We're told a shareholder vote could happen in the Spring of 2022. Accompanying management outlook comments also add some caution, pointing to a tapering of growth in the second half on tougher prior year comparatives. 

On the upside, management is now more focused on its pure North American business, bolt-on acquisitions are being made, and just $97 million of a $1 billion share buy-back programme has yet been completed. In all, with trading momentum set against a not obviously cheap valuation, the shares for now look to be up with events. 


  • Increased geographical focus
  • Ongoing share buy-back programme


  • Rising costs
  • Some outlook caution expressed 

The average rating of stock market analysts:

Strong hold

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