Ferguson plc (NYSE:FERG) First-Quarter Results: Here's What Analysts Are Forecasting For This Year

It's been a good week for Ferguson plc (NYSE:FERG) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.8% to US$181. Ferguson reported US$7.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.54 beat expectations, being 3.1% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ferguson after the latest results.

Check out our latest analysis for Ferguson

Taking into account the latest results, Ferguson's 21 analysts currently expect revenues in 2024 to be US$29.8b, approximately in line with the last 12 months. Per-share earnings are expected to increase 3.8% to US$9.25. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$29.7b and earnings per share (EPS) of US$9.04 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$178, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Ferguson at US$208 per share, while the most bearish prices it at US$106. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Ferguson's revenue growth is expected to slow, with the forecast 1.5% annualised growth rate until the end of 2024 being well below the historical 9.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Ferguson is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ferguson's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Ferguson's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Ferguson. Long-term earnings power is much more important than next year's profits. We have forecasts for Ferguson going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Ferguson you should know about.

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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.