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Ferguson plc (FERG) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of Ferguson plc (FERG - Free Report) ? Shares have been on the move with the stock up 11.2% over the past month. The stock hit a new 52-week high of $176.48 in the previous session. Ferguson plc has gained 37.1% since the start of the year compared to the 7% move for the Zacks Industrial Products sector and the 14.4% return for the Zacks Manufacturing - General Industrial industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on December 5, 2023, Ferguson plc reported EPS of $2.65 versus consensus estimate of $2.61 while it beat the consensus revenue estimate by 1.26%.
For the current fiscal year, Ferguson plc is expected to post earnings of $9.69 per share on $29.72 billion in revenues. This represents a -1.52% change in EPS on a -0.05% change in revenues. For the next fiscal year, the company is expected to earn $10.70 per share on $31.5 billion in revenues. This represents a year-over-year change of 10.46% and 5.97%, respectively.
Valuation Metrics
Ferguson plc may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ferguson plc has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 18X current fiscal year EPS estimates, which is not in-line with the peer industry average of 19.1X. On a trailing cash flow basis, the stock currently trades at 16.1X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 14.15. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ferguson plc currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ferguson plc passes the test. Thus, it seems as though Ferguson plc shares could have a bit more room to run in the near term.
How Does FERG Stack Up to the Competition?
Shares of FERG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Applied Industrial Technologies, Inc. (AIT - Free Report) . AIT has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of F.
Earnings were strong last quarter. Applied Industrial Technologies, Inc. beat our consensus estimate by 15.46%, and for the current fiscal year, AIT is expected to post earnings of $9.43 per share on revenue of $4.54 billion.
Shares of Applied Industrial Technologies, Inc. have gained 4.3% over the past month, and currently trade at a forward P/E of 17.48X and a P/CF of 15.96X.
The Manufacturing - General Industrial industry may rank in the bottom 58% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for FERG and AIT, even beyond their own solid fundamental situation.
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Ferguson plc (FERG) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Ferguson plc (FERG - Free Report) ? Shares have been on the move with the stock up 11.2% over the past month. The stock hit a new 52-week high of $176.48 in the previous session. Ferguson plc has gained 37.1% since the start of the year compared to the 7% move for the Zacks Industrial Products sector and the 14.4% return for the Zacks Manufacturing - General Industrial industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on December 5, 2023, Ferguson plc reported EPS of $2.65 versus consensus estimate of $2.61 while it beat the consensus revenue estimate by 1.26%.
For the current fiscal year, Ferguson plc is expected to post earnings of $9.69 per share on $29.72 billion in revenues. This represents a -1.52% change in EPS on a -0.05% change in revenues. For the next fiscal year, the company is expected to earn $10.70 per share on $31.5 billion in revenues. This represents a year-over-year change of 10.46% and 5.97%, respectively.
Valuation Metrics
Ferguson plc may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ferguson plc has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 18X current fiscal year EPS estimates, which is not in-line with the peer industry average of 19.1X. On a trailing cash flow basis, the stock currently trades at 16.1X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 14.15. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ferguson plc currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ferguson plc passes the test. Thus, it seems as though Ferguson plc shares could have a bit more room to run in the near term.
How Does FERG Stack Up to the Competition?
Shares of FERG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Applied Industrial Technologies, Inc. (AIT - Free Report) . AIT has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of F.
Earnings were strong last quarter. Applied Industrial Technologies, Inc. beat our consensus estimate by 15.46%, and for the current fiscal year, AIT is expected to post earnings of $9.43 per share on revenue of $4.54 billion.
Shares of Applied Industrial Technologies, Inc. have gained 4.3% over the past month, and currently trade at a forward P/E of 17.48X and a P/CF of 15.96X.
The Manufacturing - General Industrial industry may rank in the bottom 58% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for FERG and AIT, even beyond their own solid fundamental situation.