The guidance raise is the primary catalyst — sales growth acceleration from 'low-to-mid' to 'mid-single digit' signals confidence in non-residential momentum and FloWorks accretion. However, gross margin contraction and rising leverage (1.3x vs 1.2x) bear watching. The stock may open positively on the guidance upgrade, but margin headwinds cap upside. Monitor Q3 for FloWorks close impact and operating margin trajectory.
Price Chart
Executive Summary
Ferguson (FERG) reported FQ2 2026 (ended June 30) results with net sales of $8.75B, +4.6% YoY, and diluted GAAP EPS of $3.43, +6.9% YoY. Performance was solid — non-residential revenue grew 8% and residential returned to +2% growth — but adjusted operating margin contracted 10 bps and gross margin slipped 20 bps. The company raised full-year guidance from 'low to mid-single digit' sales growth to 'mid-single digit' and tightened adjusted operating margin guidance to 9.5%-9.8% (from 9.4%-9.8%). The prior quarter's EPS beat and the guidance revision provide a positive narrative, but margin compression and elevated leverage (net debt/EBITDA 1.3x vs 1.2x a year ago) constrain the bullish read.
Key Financial Metrics
Key Facts
- Q2 net sales $8.75B, +4.6% YoY (organic +3.8%, M&A +1.0%)
- GAAP diluted EPS $3.43, +6.9% YoY; adjusted diluted EPS $3.39, +5.3% YoY
- Gross margin 31.0%, down 20 bps YoY (prior year was temporarily elevated from supplier price increases)
- Adjusted operating margin 10.7%, down 10 bps YoY; GAAP operating margin 10.2%, up 10 bps
- Non-residential revenue +8%; residential revenue +2% (returned to growth)
- Full-year guidance raised: net sales growth to mid-single digit (from low-to-mid); adj. operating margin 9.5%-9.8%
- Five acquisitions closed in Q2; signed FloWorks deal (~$1.4B annualized revenue for all 8 YTD acquisitions)
- Share repurchases of $202M; quarterly dividend $0.89 maintained
- Net debt to adjusted EBITDA 1.3x vs 1.2x prior year; net debt $4.47B, up from $3.58B
- LSE secondary listing cancelled effective July 20, 2026
Financial Impact
Revenue $8.75B (+4.6%), GAAP EPS $3.43 (+6.9%), adjusted EPS $3.39 (+5.3%); guidance raised to mid-single-digit top-line growth
Risk Factors
- Gross margin compression (down 20 bps) if supplier pricing normalizes
- Elevated net debt/EBITDA at 1.3x following acquisition spending; leverage could limit share repurchase flexibility
- Residential recovery remains fragile; macro uncertainty (interest rates, tariffs) could pressure construction end markets
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0002011641-26-000038 |
| Document: ferg-20260810.htm | 0002011641-26-000038 |
| Document: 0002011641-26-000038-index-headers.html | 0002011641-26-000038 |
| Document: 0002011641-26-000038-index.html | 0002011641-26-000038 |
| Document: 0002011641-26-000038.txt | 0002011641-26-000038 |
| 8-K Data (Synthetic) | 0002011641-26-000038 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Aug 28, 2026 5w ago | 144 | $228.49 $227.30 | ▼ −0.52% | ▼ −0.78% | $223.33 (−2.26%) |
Aug 10, 2026 7w ago | 8-K | $263.78 $226.30 | ▼ −14.21% | ▼ −13.29% | $223.33 (−15.33%) |
Jun 12, 2026 16w ago | Institutional Cluster | $230.08 $227.46 | ▼ −1.14% | ▼ −2.92% | $223.33 (−2.93%) |
Mar 16, 2026 28w ago | DEFA14A | $225.92 $257.16 | ▲ +13.83% | ▲ +9.53% | $223.33 (−1.15%) |
Mar 16, 2026 28w ago | DEFA14A | $223.55 $258.86 | ▲ +15.80% | ▲ +12.02% | $223.33 (−0.10%) |
US Market Status
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