Ferguson Enterprises Inc. (NYSE:FERG) stock traded higher Monday after the company reported better-than-expected second-quarter results and raised its full-year outlook.
Earnings Snapshot
Ferguson reported adjusted earnings of $3.39 per share, topping the $3.29 analyst estimate. Sales rose 4.6% year over year to $8.75 billion, above the $8.67 billion consensus estimate.
Gross margin fell 20 basis points to 31.0%, while adjusted operating margin declined 10 basis points to 10.7%.
Ferguson declared a quarterly dividend of 89 cents per share and repurchased $202 million of shares during the quarter.
CEO Kevin Murphy said the company continued to outperform its markets, supported by strong non-residential growth and a return to residential growth despite challenging conditions.
Ferguson disclosed June 16 that it would cancel its secondary listing on the London Stock Exchange. The cancellation took effect July 20.
Segment Performance
Ferguson’s U.S. net sales rose 5.0%, including 4.0% organic growth and a 1.0% contribution from acquisitions. Residential revenue increased 2%, while non-residential revenue climbed 8%.
The company cited market share gains, healthy large-project activity, rising open orders and strong bidding activity. Adjusted operating profit increased 2.9% to $925 million.
Ferguson completed five acquisitions during the quarter across its HVAC, Commercial/Mechanical, Waterworks and Industrial businesses. The deals expanded its geographic reach and specialized capabilities.
After the quarter ended, Ferguson agreed to acquire FloWorks, a technical industrial distributor and flow-control services provider. The transaction is expected to close in the third quarter of 2026.
In Canada, sales fell 1.9%. Organic growth of 1.7% was more than offset by a 3.6% impact from a non-core divestiture. Market conditions remained challenging, particularly in residential, while adjusted operating profit declined by $1 million to $22 million.
Outlook
Ferguson is benefiting from strong data center construction as large capital projects drive its nonresidential growth.
During the earnings call, Murphy said data centers remain the strongest part of the large-project market, while demand is also growing across power generation, manufacturing and water infrastructure.
The company said project backlogs and open orders continue to build, supporting expectations for stronger revenue growth in the second half.
Ferguson raised its fiscal 2026 net sales outlook to mid-single-digit growth from its previous forecast for low- to mid-single-digit growth.
The company also raised the lower end of its adjusted operating margin outlook to 9.5%-9.8% from 9.4%-9.8%.
Ferguson increased its capital expenditure forecast to $375 million-$425 million from $350 million-$400 million.
The updated outlook excludes any expected contribution from the FloWorks acquisition, which is anticipated to close in the third quarter.
FERG Price Action: Ferguson Enterprises shares were up 2.52% at $263.14 at the time of publication on Monday, according to Benzinga Pro data.
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