Ferguson Enterprises (NYSE:FERG) Earnings call February 24, 2026 08:30 AM ET Company ParticipantsBill Brundage - CFOBrian Lantz - VP of Investor Relations and CommunicationsKeith Hughes - Managing Director of Equity ResearchKevin Murphy - President and CEOMichael Dahl - Managing Director of Equity ResearchRyan Merkel - Partner and Co-Group Head of IndustrialsConference Call ParticipantsDavid Manthey - Senior Equity Research AnalystMatthew Bouley - Senior Equity Research AnalystPhilip Ng - Senior Equity Rese ...

Valued at $39.7 billion by market cap, Comfort Systems USA, Inc. (FIX) is a leading mechanical and electrical contracting company that designs, installs, and maintains HVAC, plumbing, piping, and building automation systems for commercial, industrial, and institutional facilities. Headquartered in Houston, Texas, the company delivers both large project installations and recurring maintenance services across complex end markets, including data centers, semiconductor fabs, healthcare, and manufacturing. Sh ...

Group 1 - Comfort Systems USA, Inc. (NYSE:FIX) is recognized for its mechanical and electrical services, including HVAC, plumbing, and fire protection systems [2] - The company reported stronger-than-expected revenue for Q3 2025, driven by high demand for data centers and AI-related infrastructure [2] - Voya Investment Management highlighted an overweight position in Comfort Systems USA, which contributed positively to their fund's performance [2] Group 2 - Jim Cramer expressed a favorable view on Comfort Systems USA, suggesting that it was a good buy when priced around $20 and recommended buying more if the stock price declines [1] - There is a belief that while Comfort Systems USA has potential, certain AI stocks may offer greater upside with less downside risk [3]

Group 1: Market Sentiment and Trading Activity - Financial giants have shown a bullish sentiment towards Comfort Systems USA, with 33% of traders being bullish and 25% bearish, indicating a positive outlook [1] - The major market movers are focusing on a price band between $850.0 and $1060.0 for Comfort Systems USA over the last three months [2] - The average open interest for options stands at 38.44, with a total volume of 169.00, reflecting significant trading activity within the specified price corridor [3] Group 2: Options Trading Overview - A total of 12 unusual trades were identified, with 10 calls valued at $1,443,927 and 2 puts valued at $53,000, highlighting a preference for call options [1] - The largest options trades observed include multiple call sweeps with significant total trade prices, indicating strong interest in upward price movements [6] Group 3: Company Profile and Analyst Opinions - Comfort Systems USA Inc specializes in mechanical contracting services, primarily in HVAC, plumbing, and electrical components, with revenue split between installation and maintenance services [6] - Analysts have set an average price target of $1177.5 for Comfort Systems USA, with buy ratings from DA Davidson and Stifel, targeting $1200 and $1155 respectively [8][10] Group 4: Current Stock Performance - The current stock price of Comfort Systems USA is $1009.55, reflecting a 3.92% increase, with RSI indicators suggesting it may be approaching overbought conditions [10]

Core Insights - Home Depot's third-quarter fiscal 2025 results indicate a reliance on its Pro customer base as DIY demand remains inconsistent, with total sales increasing by 2.8% to $41,352 million despite a lack of expected demand surge due to consumer uncertainty and housing pressures [1][8] Group 1: Sales Performance - Total sales for Home Depot rose by 2.8% to $41.35 billion, supported by gains in the Pro segment amid weak DIY performance [8] - The recent acquisition of GMS contributed approximately $900 million in sales during the quarter, enhancing Home Depot's Pro ecosystem [2] - Average ticket size increased by 1.8%, with big-ticket transactions over $1,000 rising by 2.3% year over year, indicating strength in Pro-heavy categories like gypsum and plumbing [3][4] Group 2: Market Conditions - Management noted that housing turnover is at multi-decade lows, impacting renovation activity and causing consumer uncertainty [4] - DIY trends are challenged as customers reduce discretionary spending, and the anticipated demand pickup in the second half of the year did not occur [4] - Floor & Decor and Lowe's are experiencing similar structural headwinds, with Floor & Decor's comparable store sales down 1.2% and Lowe's at 0.4% [5][6] Group 3: Future Outlook - The Zacks Consensus Estimate for Home Depot's current financial-year sales suggests a year-over-year growth of 3.2%, while earnings per share are expected to decline by 4.8% [10] - Home Depot's forward price-to-earnings ratio stands at 22.94, higher than the industry average of 20.87, indicating a relatively high valuation [9]

Core Viewpoint - Ferguson Enterprises Inc. (NYSE:FERG) is considered a strong investment opportunity, with analysts projecting significant upside potential in its stock price, driven by its performance in large projects and contractor strategies [1][2][3]. Group 1: Analyst Recommendations - Seth Klarman has a $259.5 million stake in Ferguson, representing 5.42% of his total holdings, and the average price target suggests a 17% upside, with a Street high indicating a 38% upside [1]. - Ryan Merkel from William Blair maintains a Buy recommendation, citing robust performance in large projects and plumbing, while expressing some concern over the HVAC and residential sectors [2]. - Jefferies also issued a Buy rating, raising the price target from $268 to $289, despite noting a slow residential market and potential drops in customer activity [3]. Group 2: Market Performance and Challenges - Ferguson's revenue growth was reported at 3.8% for the past year, but in-store foot traffic has a modest relationship with sales revenue, which could impact future growth [3]. - Online activity at fergusonhome.com has declined significantly, with drops of 25%, 39%, and 42% in August, September, and October respectively, attributed to website rebranding and weaker DIY demand [4]. - Jefferies anticipates headwinds in clearing out inventory in the first half of FY2026, although sell-through is expected to remain healthy due to initiatives targeting dual trade contractors [5]. Group 3: Company Overview - Ferguson Enterprises Inc. is a Virginia-based company that provides plumbing, HVAC, lighting, appliances, and water and wastewater products to both residential and commercial customers [5].

Core Thesis - Limbach Holdings, Inc. is experiencing a significant stock price increase, rising from $4 in 2019 to over $110, driven by favorable construction cycles and a shift towards owner-direct relationships (ODR) [2] - The market may be overestimating the defensiveness and durability of ODR-driven growth, which now constitutes 70% of revenue [3] Revenue and Growth Analysis - ODR revenue primarily consists of large discretionary retrofit and upgrade projects rather than recurring maintenance, making it vulnerable to the weakening non-residential construction cycle [3] - ODR orders have shown a decline, falling from +33% in Q1 2025 to -8% in Q2, while GCR orders dropped by 55%, indicating a contraction in demand [3] - Historical growth rates of ODR, which averaged a 20% organic CAGR, were significantly influenced by a strong industry upcycle and may not be sustainable moving forward [4] Future Outlook - Sustainable growth is expected to align with mid-single-digit trends in non-residential construction, with limited margin expansion anticipated after a period of favorable pricing conditions [5] - Current margins are near industry ceilings, and with rising competitive pressures, Limbach's true earnings potential is likely lower than market expectations, suggesting a fair value estimate of $58 per share [5]

Core Points - Ferguson Enterprises Inc. will release its financial results for the quarter ended October 31, 2025, on December 9, 2025 [1][5] - The results will be available on Ferguson's corporate website at 6:45 a.m. ET/11:45 a.m. GMT [1][5] - A conference call and webcast for analysts and investors will take place on the same day at 8:30 a.m. ET/1:30 p.m. GMT [2][5] Company Overview - Ferguson is the largest value-added distributor in the North American construction market, which is valued at $340 billion [3] - The company reported sales of $30.8 billion for FY'25 and employs approximately 35,000 associates across over 1,700 locations [3]

Core Points - Watts Water Technologies announced the departure of Chief Financial Officer Ryan Lada to pursue a new opportunity [1][4] - Diane McClintock has been appointed as the new Chief Financial Officer, effective immediately, bringing extensive experience from her previous role as Senior Vice President of FP&A and Investor Relations [2][3] - The transition aims to ensure financial, operational, and strategic continuity within the company [2][3] Leadership Transition - Diane McClintock has been with Watts since 2010 and has played a significant role in the company's growth and financial performance [3] - McClintock expressed her commitment to executing the company's profitable growth strategy and ensuring a smooth transition [3] - The company emphasizes that Lada's departure is for personal reasons and not related to any business or financial issues [4] Company Overview - Watts Water Technologies is a global manufacturer headquartered in the USA, providing a wide range of plumbing, heating, and water quality products [5] - The company serves commercial, residential, and industrial applications with innovative solutions [5]

Core Points - Watts Water Technologies, Inc. has elected Suzanne L. Stefany to its Board of Directors, where she will also serve on the Governance and Sustainability Committee and the Compensation Committee [1] - Ms. Stefany has extensive experience in the investment banking sector, having served as a Senior Advisor and Partner at PJT Partners, and previously as a Managing Director and Global Industry Analyst at Wellington Management Company [2] - The CEO of Watts Water Technologies, Robert J. Pagano, Jr., highlighted Ms. Stefany's expertise in business strategy, M&A, capital allocation, and governance as valuable assets for the company [3] Company Overview - Watts Water Technologies is a global manufacturer based in the USA, providing a wide range of plumbing, heating, and water quality products [3] - The company focuses on innovative solutions to enhance the efficiency, safety, and quality of water across commercial, residential, and industrial applications [3]