Ferguson (FERG) Boosts Dividend and Buybacks: Prudent Capital Returns or Understated Growth Ambition?

• Ferguson Enterprises recently reported first-quarter 2025 results showing higher sales, earnings and margins, increased its quarterly dividend to US$0.89, completed a US$208.75 million share repurchase tranche, updated full‑year guidance to about 5% net sales growth, and continued expanding through acquisitions such as Moore Supply Company.
• Together with a multi‑year buyback that has reduced its share count by 27.68 million shares and a 7% dividend increase, these moves highlight Ferguson’s focus on returning capital to shareholders while leaning into growth areas like non‑residential construction, waterworks and HVAC distribution.
• We’ll now examine how Ferguson’s higher guidance and dividend increase reshape the earlier investment narrative around growth, margins and capital returns.

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Ferguson Enterprises Investment Narrative Recap

To own Ferguson, you need to believe in its role as a leading distributor to non residential construction, waterworks and HVAC professionals, and its ability to defend margins despite pricing and competitive pressure. The latest quarter’s solid sales and margin gains, higher guidance and a larger dividend support the near term catalyst around improved profitability, while the key risk remains weakness in residential and HVAC demand, which the company still expects to weigh on results into early 2026.

The most relevant update is Ferguson’s guidance for about 5% net sales growth and an adjusted operating margin of 9.4% to 9.6% for 2025, which directly addresses the earlier concern that commodity led deflation and softer residential markets could compress margins. This firmer outlook, combined with ongoing acquisitions like Moore Supply Company, matters because it speaks to whether growth in non residential and waterworks can offset pressure in more cyclical residential categories.

Yet investors should also be aware that ongoing residential and HVAC softness could still challenge Ferguson’s ability to offset...

Read the full narrative on Ferguson Enterprises (it's free!)

Ferguson Enterprises' narrative projects $36.5 billion revenue and $2.4 billion earnings by 2028. This requires 6.5% yearly revenue growth and about a $0.8 billion earnings increase from $1.6 billion today.

Uncover how Ferguson Enterprises' forecasts yield a $259.59 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Four Simply Wall St Community valuations put Ferguson’s fair value between US$224.90 and US$259.59, underlining how widely views can differ. Against that spread, the recent guidance upgrade and margin improvement sharpen the debate on whether non residential and waterworks strength can continue to counter residential and HVAC weakness over time.

Explore 4 other fair value estimates on Ferguson Enterprises - why the stock might be worth just $224.90!

Build Your Own Ferguson Enterprises Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Ferguson Enterprises research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Ferguson Enterprises research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Ferguson Enterprises' overall financial health at a glance.

No Opportunity In Ferguson Enterprises?

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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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