Evaluating Ferguson After 34% Rally and Strong Q2 Earnings Momentum in 2025

Thinking about making a move with Ferguson Enterprises? You are not alone. With shares recently closing at $232.49, Ferguson has been quietly making waves while many investors debate whether the stock is now a buy, a hold, or due for a breather. Over the past year, it has gained 9.7%, which is not a headline-grabbing surge but steady enough to catch the eye. Even more compelling, the stock is up 34.1% year-to-date and a substantial 110.1% over three years, reflecting solid long-term momentum and possible changing perceptions of risk and reward around Ferguson’s market positioning.

Zooming in, recent returns hint at growing confidence: the stock is up 0.6% in the past week and 3.8% over the last 30 days. Behind the scenes, broader market developments are nudging sector leaders like Ferguson higher as investors look for stable plays with upside potential. But of course, the real question is always value: is the price right relative to what you are actually getting?

According to our six-factor valuation check, Ferguson scores a 2, meaning it appears undervalued in two categories out of six. That leaves plenty of room for debate and opportunity. Next, we will break down the classic valuation approaches to see how they stack up for Ferguson Enterprises, and later, we will explore an even more insightful way to understand the company’s true worth.

Ferguson Enterprises scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Ferguson Enterprises Cash Flows

The Discounted Cash Flow (DCF) model is a classic tool for valuing companies. It estimates how much future cash Ferguson Enterprises could generate and translates those projections back to today’s dollar value. At its core, this approach asks: what are all the company’s future Free Cash Flows (FCF) worth now, after applying a sensible discount rate?

For Ferguson, the latest trailing twelve months FCF is $1.35 billion. Analyst projections indicate a healthy pace of growth, with FCF expected to reach $2.57 billion by 2029. Looking further ahead, using a blend of analyst estimates and extrapolation, Ferguson’s FCF is projected to keep climbing over the next decade.

Based on a 2 Stage Free Cash Flow to Equity model, the DCF valuation estimates Ferguson’s intrinsic value at $256.12 per share. With the current market price at $232.49, the stock appears to be about 9.2% undervalued from this cash flow perspective. In other words, the shares are trading at a slight discount compared to what the company could be worth based on its growth prospects and cash flow generation.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ferguson Enterprises.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Ferguson Enterprises's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Ferguson Enterprises Price vs Earnings

For established, profitable companies like Ferguson Enterprises, the price-to-earnings (PE) ratio is a common valuation tool. It measures how much investors are paying today for a dollar of current earnings, making it especially useful when cash flows are steady and profits are consistent.

Interpreting a company’s PE ratio depends on context. Higher growth rates or lower risks often justify a higher "normal" PE, while greater uncertainty or lower expectations might lower it. That is why benchmarks are helpful. Ferguson’s PE is 28.5x, compared to an industry average of 23.6x and a peer average PE of 26.2x. At first glance, Ferguson trades at a premium, but that does not tell the full story.

This is where Simply Wall St’s Fair Ratio is useful. Unlike basic comparisons, the Fair Ratio (here 29.8x) is customized for Ferguson by factoring in its growth outlook, earnings quality, risk profile, profit margins, industry conditions, and size. This more comprehensive view offers a clearer sense of what multiple would be justified for Ferguson specifically, not just what the average company has.

With Ferguson trading at 28.5x and its Fair Ratio at 29.8x, the stock appears to be roughly in line with the valuation indicated by its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Ferguson Enterprises Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personal story about Ferguson Enterprises, where you connect your view of the business, such as future revenue, margins, and risks, to a financial forecast and a fair value estimate.

Narratives help bridge the gap between numbers and real-world events by letting investors capture not just what might happen, but also why they think it will. Available directly on Simply Wall St’s Community page, Narratives are easy to use and accessible to millions of investors who want to put their thinking front and center.

With Narratives, you can see at a glance whether Ferguson Enterprises' current share price is below or above the fair value you estimate. This helps you decide when to buy or sell based on your research and expectations, rather than relying solely on raw data or averages.

As new information, such as fresh earnings or major news, becomes available, Narratives update automatically to reflect these changes so your decisions stay in sync with the latest insights.

For example, one investor may see big upside with a fair value of $280.00, while another is more cautious and thinks $180.00 is fair, showing just how much perspectives can differ even with the same set of facts.

Do you think there's more to the story for Ferguson Enterprises? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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