How to Approach Ferguson Stock Ahead of Its Q1 Earnings Release?

Core Viewpoint - Ferguson Enterprises Inc. is expected to report first-quarter fiscal 2026 results on December 9, with earnings estimated at $2.77 per share and revenues at $8.2 billion, reflecting year-over-year growth [1][2][7]. Earnings Estimates - The earnings estimates for the fiscal first quarter have remained stable over the past 60 days, indicating a 13.1% increase from the previous year, while revenues are projected to grow by 5.3% year-over-year [2][7]. - The Zacks Consensus Estimate for U.S. business revenues is pegged at $7.74 billion, and for Canada, it is estimated at $416 million [9][10]. Earnings Surprise History - Ferguson has a mixed earnings surprise history, with an average surprise of 7.7%. In the last reported quarter, the company earned $3.48 per share, exceeding the consensus estimate of $3.00 [3][4]. Earnings Prediction - The company has a positive Earnings ESP of +2.53%, suggesting a likelihood of an earnings beat, with the Most Accurate Estimate at $2.84 [4]. Business Performance Factors - The U.S. business is expected to benefit from strong demand in non-residential markets, particularly in waterworks and large capital projects, while the Canadian business is likely to see positive contributions from recent acquisitions [8][10]. - However, challenges such as rising operating costs and currency headwinds may pressure margins [7][12]. Acquisitions Impact - Recent acquisitions are anticipated to contribute positively to revenues, with a noted impact of approximately 1% and 4.9% on U.S. and Canada business sales, respectively, from four acquisitions completed in the fourth quarter of fiscal 2025 [11]. Price Performance - Ferguson shares have increased by 4.5% over the past three months, outperforming the Zacks Manufacturing - General Industrial industry and the S&P 500 [13]. Valuation - The company is trading at a forward P/E ratio of 22.42X, higher than the industry average of 21.86X, which may pose risks if market sentiment declines [17]. Investment Thesis - The solid momentum in the U.S. business and strategic acquisitions are expected to support long-term growth, despite concerns over rising operating expenses and high valuation [20][21].