Newport News, August 11, 2026, 05:48 EDT – Ferguson’s shares advanced 2.8% after the company reported that robust activity in the non-residential sector has improved its outlook.
- Shares of Ferguson climbed 2.76% to $263.78 after the distributor raised its 2026 outlook.
- Sales in the second quarter climbed 4.6% to $8.75 billion, with adjusted earnings per share up 5.3% to $3.39.
- U.S. non-residential revenue rose by 8%, outpacing the 2% growth seen in residential revenue by a factor of four.
- The revised forecast does not factor in the ongoing $1.6 billion FloWorks acquisition.
Ferguson Enterprises Inc. NYSE:FERG advanced 2.76% on Monday following an increase in its guidance for 2026. The stock settled at $263.78, up $7.08, prior to the premarket session on Tuesday.
The answer lies in the growth breakdown: U.S. non-residential revenue rose 8%, with residential revenue up 2%. Both segments account for roughly half of domestic sales.
This breakdown suggests that non-residential demand accounted for around four out of Ferguson’s five U.S. growth points, with residential making up about one. The calculation is based on the company’s nearly even revenue split.
| Second-quarter measure | 2026 | 2025 | Change |
|---|---|---|---|
| Net sales | $8.751bn | $8.363bn | +4.6% |
| Gross margin | 31.0% | 31.2% | -20 bps |
| Operating profit | $893m | $842m | +6.1% |
| Adjusted operating profit | $932m | $906m | +2.9% |
| Diluted EPS | $3.43 | $3.21 | +6.9% |
| Adjusted diluted EPS | $3.39 | $3.22 | +5.3% |
| Net debt / adjusted EBITDA | 1.3x | 1.2x | +0.1x |
Adjusted operating-profit growth lagged behind sales growth, while gross margin declined by 20 basis points. One basis point equals one-hundredth of a percentage point. According to the filing, last year’s margin comparison reflected exceptionally favorable timing of supplier prices.
Chief Executive Kevin Murphy stated, “We delivered another strong quarter of non-residential growth and we returned to growth in residential despite the challenging market backdrop.” Ferguson filing
| U.S. growth component | Revenue exposure | Quarterly growth | Approximate contribution |
|---|---|---|---|
| Residential | Roughly 50% | +2% | +1 point |
| Non-residential | Roughly 50% | +8% | +4 points |
| Total U.S. sales | 100% | +5.0% | +5 points |
| U.S. organic sales | Not applicable | +4.0% | Reported |
| Acquisitions | Not applicable | +1.0% | Reported |
The estimate above assigns equal importance to growth in residential and non-residential sectors. This aligns with the 5.0% rise in U.S. sales reported by Ferguson. Large-project orders and bidding activity were robust, but housing construction and repair demand continued to be weak.
Housing conditions are getting better, though the pace remains gradual. Residential revenue rose by 2%, which remains six percentage points lower than demand in the non-residential sector.
Ferguson lifted its sales outlook to project mid-single-digit growth. The company increased the lower bound of its adjusted operating margin guidance to 9.5%, maintaining the upper end at 9.8%.
| 2026 outlook measure | Prior guidance | Updated guidance | Change |
|---|---|---|---|
| Net sales growth | Low to mid-single digit | Mid-single digit | Increased |
| Adjusted operating margin | 9.4%-9.8% | 9.5%-9.8% | Lower end up 10 bps |
| Interest expense | About $200m | About $200m | No change |
| Capital expenditure | $350m-$400m | $375m-$425m | Midpoint up $25m |
| Adjusted tax rate | About 26% | About 26% | No change |
The margin midpoint increased by five basis points to 9.65%. The midpoint for capital spending climbed 6.7% to $400 million. Guidance does not include FloWorks, with Ferguson anticipating the acquisition will complete in the third quarter.
FloWorks is set to bring approximately $1 billion in yearly sales for a total enterprise value of $1.6 billion. The company operates in sectors including data centers, semiconductor manufacturing facilities, and broader industrial markets, with anticipated synergies of roughly $45 million.
Before the acquisition, cash conversion declined, with operating cash flow for the first half dropping to $716 million from $1.12 billion. Ferguson made $583 million in acquisitions and allocated $234 million to capital investments in the same period.
Monday’s advance boosted equity value by approximately $1.37 billion, based on a $7.08 rise and 193.94 million shares outstanding. The closing price is still 2.9% under the 52-week peak of $271.64.
| Analyst | Firm | Recommendation | Target | Date |
|---|---|---|---|---|
| Ryan Merkel | William Blair | Buy, reaffirmed | Not listed | July 22 |
| Keith Hughes | Truist Financial NYSE:TFC | Buy, reaffirmed | Not listed | July 14 |
| Suhasini Varanasi | Goldman Sachs NYSE:GS | Hold, reaffirmed | $265 | July 14 |
| Matthew Bouley | Barclays NYSE:BCS | Buy, reiterated | $297 | July 13 |
| Sam Reid | Wells Fargo NYSE:WFC | Buy, reiterated | $285 | July 14 |
| Chad Dillard | Bernstein | Buy, reaffirmed | $310 | July 6 |
| Annelies Vermeulen | Morgan Stanley NYSE:MS | Buy, reaffirmed | $290 | May 13 |
| Anthony Pettinari | Citigroup NYSE:C | Hold, reiterated | $275 | May 7 |
The latest coverage shows eight analysts rating the stock as a buy and two as a hold, with no sell recommendations. The consensus 12-month price target is $292.83, suggesting an 11.0% potential increase from Monday’s closing price. The majority of these ratings were issued before the latest results, so updates could be forthcoming.
Risks: A slump in housing demand might hinder the 2% rebound in residential activity. FloWorks could introduce added integration expenses, and leverage has climbed to 1.3 times adjusted EBITDA. Lower large-project bookings would impact the primary driver of growth.
The upcoming confirmation will be whether November’s figures maintain the six-point growth difference while avoiding additional cash-flow decline. Ferguson’s next quarterly report is scheduled for November 9.
