Company Overview - Ferguson is the largest scaled specialty distributor for North American plumbing, HVAC, and waterworks [2] - The company's revenue is approximately split 51% residential and 49% non-residential [2] Revenue Breakdown - About 60% of Ferguson's revenue comes from repair and replace (R&R) activities, while 40% is generated from new housing builds [2] - The distribution of revenue indicates a balanced approach between residential and non-residential sectors, highlighting the company's diverse market presence [2]

Market Overview - Despite high tariffs and a 22% correction in the S&P 500 earlier this year, equities are near all-time highs entering Q4, supported by monetary policy easing [2] - The Federal Reserve cut short-term interest rates to 4.00%–4.25% on September 17, indicating progress on inflation and softer labor conditions [2] - Markets anticipate two more 25 basis point cuts by year-end, contingent on cooling core service and wage inflation [2] Inflation and Consumer Impact - The headline consumer price index (CPI) is up 2.9% year-over-year, with low-income consumers feeling strain while high-income consumers remain resilient [5] - Goods deflation and cheaper traded inputs have mitigated the impact of tariffs on everyday prices, with import prices remaining flat to down through mid-2025 [4] - Core PCE inflation is in the high-2s, with stickiness in services rather than tariff-exposed goods [4] Corporate Activity and M&A Trends - Corporate boardrooms are increasingly engaging in mergers and acquisitions, driven by easing funding costs and a pursuit of scale [6] - Valuations have re-accelerated despite mixed deal volumes, with expectations for continued M&A activity in AI-adjacent tech, infrastructure, and select industrials [6] Earnings and Valuation Insights - The S&P 500 is near all-time highs with a forward 12-month price-to-earnings ratio of 22–22.5x, above historical averages, limiting expansion of stock valuation multiples [7] - Continued profit growth and free cash flow durability are essential for the next leg up in the market [7] AI Infrastructure and Investment Dynamics - Corporate investment in AI is driving market dynamics, with capital expenditure extending beyond GPUs to the entire infrastructure stack [11] - OpenAI is central to this investment shift, leveraging its user base to influence the AI value chain [12] - OpenAI's partnerships and contracts, including a reported ~$300 billion deal with Oracle, indicate a shift towards debt-fueled funding in the AI sector [16] Company-Specific Insights: Ferguson Plc - Ferguson is the largest specialty distributor for North American plumbing, with a revenue split of ~51% residential and 49% non-residential [22] - Despite a 16% drop in shares post-earnings due to fears of commodity deflation, revenue held steady, indicating resilience in pricing power [23] - The company is expected to continue compounding growth through organic means and accretive M&A, benefiting from structural advantages in sourcing and efficiency [25] Company-Specific Insights: Broadcom - Broadcom has been a strong performer in the semiconductor sector, positioned as a key player in the AI market alongside Nvidia [27] - The company excels in custom AI chips and networking solutions, with significant revenue growth expected in its AI segment [29] - Broadcom's strategic M&A and strong balance sheet position it well for future growth, particularly in AI and networking [33]

Core Insights - Ferguson Enterprises Inc. (FERG) and Flowserve Corporation (FLS) are key players in the manufacturing - general industrial industry, competing in the industrial pump and valve markets [1][2] Ferguson Enterprises Inc. (FERG) - FERG is experiencing strong momentum in its U.S. business, with non-residential market revenues increasing by 6.8% year over year in fiscal 2025, contributing to half of its U.S. business [3][4] - The company's commercial and civil infrastructure markets saw revenue increases of 7% and 9%, respectively, although residential market softness partially offset these gains [4] - FERG's Canadian business also benefited from non-residential market strength, with revenues rising 3.7% year over year [5] - The company is focused on acquisitions to expand its customer base and product lines, completing four acquisitions in Q4 of fiscal 2025, which contributed approximately 1% and 4.9% to U.S. and Canada sales, respectively [6] - FERG's long-term debt stood at $3.75 billion at the end of fiscal 2025, with interest expenses increasing by 6.1% year over year to $190 million [7] - Rising costs are a concern, with the cost of goods sold increasing by 3.6% to $21.3 billion and selling, general, and administrative expenses rising by 5.6% to $6.4 billion in fiscal 2025 [8] Flowserve Corporation (FLS) - FLS is experiencing strong growth in its Pump and Flow Control Division segments, driven by robust aftermarket demand across various regions [9][11] - The Pump Division's revenues increased by 1.3% year over year in the first half of 2025, while the Flow Control Division saw a revenue surge of 10.1% [11] - FLS expects total revenues to grow by 5-6% in 2025, supported by its Diversify, Decarbonize, and Digitize (3D) strategy, which aims to expand its market presence and capitalize on investments in clean energy [12] - The MOGAS acquisition in October 2024 enhanced FLS's valve and automation portfolio, contributing positively to sales growth by 2.6% in Q2 2025 [13] - However, rising costs of sales and expenses are a concern, with cost of sales increasing by 1.1% to $1.56 billion and selling, general, and administrative expenses rising by 9% in the first half of 2025 [14] Financial Estimates and Valuation - The Zacks Consensus Estimate for FERG's fiscal 2026 sales is $32.1 billion, indicating a year-over-year growth of 4.4%, with earnings estimated at $10.59 per share, a 6.5% increase [15] - For FLS, the consensus estimate for 2025 sales is approximately $4.81 billion, reflecting a growth of 5.6%, with earnings projected at $3.37 per share, a significant increase of 28.1% [18] - FLS is trading at a forward price-to-earnings ratio of 13.97X, below its three-year median of 17.06X, while FERG's ratio is higher at 22.63X, above its median of 18.05X [21] Conclusion - FERG's strengths in the U.S. and Canada are tempered by weaknesses in the residential market and rising expenses, suggesting a cautious approach for investors [23] - In contrast, FLS's strong momentum and attractive valuation position it favorably for growth, despite potential margin pressures from rising operating expenses [24] - Overall, FLS appears to have an edge over FERG based on long-term prospects, revenue growth potential, and valuation metrics [25]

Core Points - Ferguson Enterprises Inc. announced a dividend of $0.83 per share, scheduled for payment on November 7, 2025 [1] - The record date for stockholders to qualify for the dividend is September 26, 2025 [1] - Holders of Depositary Interests will receive payments in pounds sterling unless an alternative currency is elected [1]

Core Insights - Ferguson Enterprises Inc. (FERG) achieved margin growth in fiscal 2025 despite rising costs and expenses, indicating a commitment to long-term profitability [1][2] Financial Performance - The cost of sales for FERG increased by 3.6% year over year to $21.3 billion due to higher input costs [1] - Selling, general and administrative expenses rose by 5.6% year over year to $6.4 billion, driven by labor costs, performance-based compensation, and infrastructure investments [1] - FERG's gross margin improved by 70 basis points to 31.7% year over year [2] - Adjusted operating profit grew by 0.6% year over year to $2.84 billion, with an adjusted operating margin of 9.2% [2][8] - The company expects an adjusted operating margin of 9.2-9.6% for calendar 2025, compared to 9.1% in calendar 2024 [2] Operational Initiatives - In the second half of fiscal 2025, FERG undertook business restructuring initiatives, incurring $73 million in related expenses to optimize operations and improve productivity [3][4] Market Position - FERG's focus on cost control, efficient operations, and balanced exposure across residential and non-residential markets positions it well for sustained margin performance [4] - FERG's shares surged by 18.6% over the past year, outperforming the industry's growth of 0.1% [7] Valuation Metrics - FERG is trading at a forward price-to-earnings ratio of 22.28X, above the industry average of 20.50X [10] - The Zacks Consensus Estimate for FERG's fiscal 2026 earnings has been on the rise over the past 60 days [12]

Core Insights - Ferguson Enterprises Inc. (FERG) has experienced a 42.6% increase in stock price over the past six months, outperforming the industry and S&P 500 growth rates of 19.4% and 27.5% respectively [1][8] - The company's U.S. revenues grew by 3.8% in fiscal 2025, driven by strong demand in non-residential markets, particularly in waterworks and commercial infrastructure [8][9] - Despite strong performance, concerns exist regarding high input costs, significant debt levels, and elevated valuation metrics [13][14][15] Financial Performance - FERG's stock closed at $234.83, below its 52-week high of $243.40 but above its low of $146.00, indicating solid upward momentum [4] - The company reported a 3.8% year-over-year revenue increase in fiscal 2025, with non-residential markets contributing significantly [9][10] - Revenues from commercial and civil infrastructure markets surged by 7% and 9% respectively, aiding overall growth [10] Strategic Initiatives - Ferguson has been expanding through strategic acquisitions, completing four in the fourth quarter of fiscal 2025, which contributed approximately 1% and 4.9% to U.S. and Canada sales respectively [12] - The company is witnessing healthy demand in Canada, with revenues increasing by 3.7% year over year [11] Cost and Debt Concerns - The cost of goods sold rose by 3.6% year over year to $21.3 billion, maintaining a flat percentage of net sales at 69.3% [13] - Long-term debt stood at $3.75 billion, with interest expenses increasing by 6.1% to $190 million, raising concerns about financial leverage [14] Valuation Metrics - FERG is trading at a forward P/E ratio of 21.79X, higher than the industry average of 20.81X, which may pose risks if market sentiment declines [15] - Earnings estimates for fiscal 2026 are projected at $10.59 per share, reflecting a 0.4% increase, while fiscal 2027 estimates show a slight decline of 0.5% [17]

Core Insights - Ferguson Enterprises Inc. (FERG) is experiencing growth in its U.S. business, primarily driven by strong demand in non-residential markets, with a 15% year-over-year revenue increase in these markets during Q4 FY25 [1][8] - The company's overall U.S. revenues increased by 7% year-over-year in the same quarter, despite some weakness in residential repair and maintenance sectors [2][8] - Strategic acquisitions have contributed to Ferguson's growth, with four acquisitions completed in Q4 FY25, adding approximately 1% to U.S. business sales [3][8] Business Performance - Non-residential revenues surged by 15%, supported by robust performance in waterworks and commercial infrastructure projects [1][8] - Waterworks and commercial & mechanical markets saw revenue increases of 15% and 21%, respectively, significantly benefiting the U.S. business [2] - The overall U.S. business growth was partially offset by a decline in residential repair, maintenance, and improvement work [2] Competitive Landscape - Johnson Controls plc's Americas segment reported a 7% year-over-year organic revenue increase in Q3 FY25, driven by demand for HVAC platforms [4] - Fastenal Company is enhancing customer engagement through virtual platforms, with eBusiness sales growing 13.5% year-over-year and contributing 30% to total sales in Q2 FY25 [5] Valuation and Estimates - Ferguson's shares have increased by 20.3% over the past year, outperforming the industry growth of 4.6% [6] - The company is trading at a forward price-to-earnings ratio of 21.77X, slightly above the industry average of 21.14X [9] - The Zacks Consensus Estimate for Ferguson's fiscal 2026 earnings has been rising over the past 60 days, indicating positive market sentiment [11]

Core Insights - Ferguson Enterprises Inc. filed a Form 10-K with the U.S. Securities and Exchange Commission on September 26, 2025 [1] - Ferguson is identified as the largest value-added distributor serving the water and air sectors [1] Company Overview - Ferguson operates under the ticker symbols NYSE: FERG and LSE: FERG [1] - The company's filings, including the Form 10-K, are accessible on the SEC's website and its own investor relations page [1]

Group 1 - Ferguson Enterprises Inc. (FERG) is a leading distributor of building products, serving both residential and non-residential markets with a wide array of plumbing, HVAC, waterworks, and construction supplies [2] - The company achieved organic growth of 1% in its Residential segment in 2025, outperforming a 3% sector decline, and 6% growth in Non-Residential versus flat sector growth, outperforming peers by approximately 500 basis points [3] - FERG maintains gross margins around 30%, operating margins of 9–10% (adjusted 11.4% in Q4), and an ROIC of 30% in 2023–2024, reflecting efficient operations and strong capital allocation [4] Group 2 - FERG is positioned to benefit from reshoring, data center growth, and ongoing market share gains, with mid-single-digit revenue growth and mid- to high-single-digit free cash flow growth expected over the next five years [5] - Potential upside catalysts include inclusion in the S&P 500, which could re-rate the stock, while the company's scale, expertise, and consistent profitability provide a resilient investment profile [5] - The company’s competitive moat is anchored in distribution volume, broad product offerings, and specialized knowledge in water-related and dual-trade projects, effectively targeting professional customers [4]

Group 1 - Performance Food Group Company announced the appointment of Scott Ferguson to its Board of Directors [1] - Scott Ferguson is the Founder and Managing Partner of Sachem Head Capital Management LP [1] - The appointment is effective immediately and reflects a commitment to enhancing stockholder value [1]