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]