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Flowserve's Pump and Flow Control segments grew on strong aftermarket demand across multiple regions.
FLS' 3D strategy and lower valuation position it better than FERG for potential upside in 2025.
Ferguson Enterprises Inc. (FERG - Free Report) and Flowserve Corporation (FLS - Free Report) are two familiar names operating in the Zacks manufacturing - general industrial industry. Both companies compete in multiple sectors with significant overlap in the industrial pump and valve product markets.
Both companies are poised to benefit from solid growth prospects in the industrial, chemical and construction markets. But which company is better positioned to deliver upside in 2025? Let’s compare their fundamentals, growth prospects and challenges to see which stock stands out now.
The Case for Ferguson
Ferguson is benefiting from solid momentum in its U.S. business, driven by strong demand in the non-residential markets. In fiscal 2025 (ended July 2025), the company’s revenues from the non-residential markets jumped 6.8% year over year, which accounted for half of its U.S. business. A strong pipeline of waterworks and large capital projects, with strength across commercial and civil infrastructure markets, is likely to continue driving its performance.
It's worth noting that revenues from the company’s commercial & civil infrastructure markets surged 7% and 9%, respectively. This uptick significantly benefited Ferguson’s U.S. business, which reported a 3.8% year-over-year revenue increase in fiscal 2025. However, soft repair, maintenance and improvement work across residential end markets partially offset this strength.
Also, strength in the company’s non-residential markets, along with the positive contribution from its buyouts, has been driving its Canada business. Revenues from this business increased 3.7% year over year in the fiscal year.
Ferguson remains focused on acquiring businesses to gain access to new customers, regions and product lines. For instance, FERG completed four acquisitions during the fourth quarter of fiscal 2025, which included Ritchie Environmental Solutions, HPS Specialties, Manufactured Duct & Supply Company and Water Resources. In the fiscal fourth quarter, acquisitions contributed approximately 1% and 4.9% to the sales of U.S. and Canada businesses, respectively.
Despite the positives, Ferguson’s highly leveraged balance sheet remains concerning. At the end of fiscal 2025, the company’s long-term debt was high at $3.75 billion. Also, interest expenses in the fiscal year increased 6.1% year over year to $190 million due to higher average borrowings. Considering FERG's high debt level, its cash and cash equivalents of $674 million do not look impressive.
Apart from this, it has been grappling with rising costs and operating expenses. For instance, in fiscal 2025, FERG’s cost of goods sold increased 3.6% year over year to $21.3 billion due to increasing input costs. Also, the company’s selling, general and administrative expenses rose 5.6% to $6.4 billion.
The Case for Flowserve
Flowserve is witnessing strong momentum in the Pump Division and Flow Control Division segments. Strength in the aftermarket business, driven by a strong demand for products and services in North America, the Middle East and Africa, is a prime catalyst for the Pumps Division segment’s growth. An increase in bookings across general industries and power end markets also bodes well. The segment’s revenues were up 1.3% year over year in the first six months of 2025.
Solid momentum across original equipment and aftermarket businesses, driven by an increase in demand for products and services in Asia Pacific, North America, Latin America, Middle East and Europe, is supporting the Flow Control Division segment’s performance. Segmental revenues surged 10.1% year over year in the first six months. Driven by strength across its businesses, in 2025, Flowserve expects total revenues to increase in the range of 5-6% from the year-ago level.
Strength in end markets, along with the company’s Diversify, Decarbonize and Digitize (3D) strategy, is driving Flowserve's booking levels. With the 3D strategy, Flowserve aims to expand its presence in diverse end markets and benefit from global investments in clean energy and greener infrastructure. The strategy has enabled it to pursue cycle-resilient end markets, including water and specialty chemicals.
The company’s MOGAS acquisition (October 2024) augmented its existing valve and automation product portfolio and accelerated its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. The buyout has improved its aftermarket potential and generated revenue growth synergies. In second-quarter 2025, the buyout had a positive contribution of 2.6% to its sales growth.
However, the rising cost of sales and expenses poses a threat to its margins. In the first six months of 2025, FLS’ cost of sales increased 1.1% year over year to $1.56 billion due to higher input costs. The metric, as a percentage of net sales, was 66.7%. Selling, general and administrative expenses increased 9% in the same period.
How Does the Zacks Consensus Estimate Compare for FERG & FLS?
The Zacks Consensus Estimate for FERG’s fiscal 2026 (ending July 2026) sales is $32.1 billion, implying year-over-year growth of 4.4%. The consensus estimate for its bottom line is pegged at $10.59 per share, suggesting an increase of 6.5% year over year.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FLS’ 2025 sales is approximately $4.81 billion, indicating growth of 5.6% year over year. Estimates for its earnings are pegged at $3.37 per share, indicating a surge of 28.1% year over year.
Image Source: Zacks Investment Research
Price Performance Comparison
In the past six months, Ferguson’s shares have surged 49.9%, while Flowserve stock has gained 23.2%.
Image Source: Zacks Investment Research
FLS’ Valuation Attractive Than FERG
FLS is trading at a forward 12-month price-to-earnings ratio of 13.97X, below its median of 17.06X over the last three years. FERG’s forward earnings multiple sits much higher at 22.63X, above its median of 18.05X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
Ferguson’s strength in the U.S. and Canada segments has been diluted by the persistent weakness in its residential market. Also, FERG’s rising expenses and expensive valuation warrant a cautious approach for existing investors.
In contrast, Flowserve’s robust momentum in the Pump and Flow Control Division segments, solid backlog level and 3D initiatives bode well for solid growth in the quarters ahead. However, increasing operating expenses might hurt its margin profile. Nevertheless, FLS’ attractive valuation is more appealing and healthy estimates instill confidence.
Both the industrial companies currently carry a Zacks Rank #3 (Hold), which makes choosing one stock a difficult task. Considering their long-term prospects, revenue growth potential and valuation, FLS seems to have an edge over FERG currently. While FLS carries a VGM of B, FERG has a VGM of C.
Image: Bigstock
Ferguson vs. Flowserve: Which Industrial Stock Has Greater Upside?
Key Takeaways
Ferguson Enterprises Inc. (FERG - Free Report) and Flowserve Corporation (FLS - Free Report) are two familiar names operating in the Zacks manufacturing - general industrial industry. Both companies compete in multiple sectors with significant overlap in the industrial pump and valve product markets.
Both companies are poised to benefit from solid growth prospects in the industrial, chemical and construction markets. But which company is better positioned to deliver upside in 2025? Let’s compare their fundamentals, growth prospects and challenges to see which stock stands out now.
The Case for Ferguson
Ferguson is benefiting from solid momentum in its U.S. business, driven by strong demand in the non-residential markets. In fiscal 2025 (ended July 2025), the company’s revenues from the non-residential markets jumped 6.8% year over year, which accounted for half of its U.S. business. A strong pipeline of waterworks and large capital projects, with strength across commercial and civil infrastructure markets, is likely to continue driving its performance.
It's worth noting that revenues from the company’s commercial & civil infrastructure markets surged 7% and 9%, respectively. This uptick significantly benefited Ferguson’s U.S. business, which reported a 3.8% year-over-year revenue increase in fiscal 2025. However, soft repair, maintenance and improvement work across residential end markets partially offset this strength.
Also, strength in the company’s non-residential markets, along with the positive contribution from its buyouts, has been driving its Canada business. Revenues from this business increased 3.7% year over year in the fiscal year.
Ferguson remains focused on acquiring businesses to gain access to new customers, regions and product lines. For instance, FERG completed four acquisitions during the fourth quarter of fiscal 2025, which included Ritchie Environmental Solutions, HPS Specialties, Manufactured Duct & Supply Company and Water Resources. In the fiscal fourth quarter, acquisitions contributed approximately 1% and 4.9% to the sales of U.S. and Canada businesses, respectively.
Despite the positives, Ferguson’s highly leveraged balance sheet remains concerning. At the end of fiscal 2025, the company’s long-term debt was high at $3.75 billion. Also, interest expenses in the fiscal year increased 6.1% year over year to $190 million due to higher average borrowings. Considering FERG's high debt level, its cash and cash equivalents of $674 million do not look impressive.
Apart from this, it has been grappling with rising costs and operating expenses. For instance, in fiscal 2025, FERG’s cost of goods sold increased 3.6% year over year to $21.3 billion due to increasing input costs. Also, the company’s selling, general and administrative expenses rose 5.6% to $6.4 billion.
The Case for Flowserve
Flowserve is witnessing strong momentum in the Pump Division and Flow Control Division segments. Strength in the aftermarket business, driven by a strong demand for products and services in North America, the Middle East and Africa, is a prime catalyst for the Pumps Division segment’s growth. An increase in bookings across general industries and power end markets also bodes well. The segment’s revenues were up 1.3% year over year in the first six months of 2025.
Solid momentum across original equipment and aftermarket businesses, driven by an increase in demand for products and services in Asia Pacific, North America, Latin America, Middle East and Europe, is supporting the Flow Control Division segment’s performance. Segmental revenues surged 10.1% year over year in the first six months. Driven by strength across its businesses, in 2025, Flowserve expects total revenues to increase in the range of 5-6% from the year-ago level.
Strength in end markets, along with the company’s Diversify, Decarbonize and Digitize (3D) strategy, is driving Flowserve's booking levels. With the 3D strategy, Flowserve aims to expand its presence in diverse end markets and benefit from global investments in clean energy and greener infrastructure. The strategy has enabled it to pursue cycle-resilient end markets, including water and specialty chemicals.
The company’s MOGAS acquisition (October 2024) augmented its existing valve and automation product portfolio and accelerated its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. The buyout has improved its aftermarket potential and generated revenue growth synergies. In second-quarter 2025, the buyout had a positive contribution of 2.6% to its sales growth.
However, the rising cost of sales and expenses poses a threat to its margins. In the first six months of 2025, FLS’ cost of sales increased 1.1% year over year to $1.56 billion due to higher input costs. The metric, as a percentage of net sales, was 66.7%. Selling, general and administrative expenses increased 9% in the same period.
How Does the Zacks Consensus Estimate Compare for FERG & FLS?
The Zacks Consensus Estimate for FERG’s fiscal 2026 (ending July 2026) sales is $32.1 billion, implying year-over-year growth of 4.4%. The consensus estimate for its bottom line is pegged at $10.59 per share, suggesting an increase of 6.5% year over year.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FLS’ 2025 sales is approximately $4.81 billion, indicating growth of 5.6% year over year. Estimates for its earnings are pegged at $3.37 per share, indicating a surge of 28.1% year over year.
Image Source: Zacks Investment Research
Price Performance Comparison
In the past six months, Ferguson’s shares have surged 49.9%, while Flowserve stock has gained 23.2%.
Image Source: Zacks Investment Research
FLS’ Valuation Attractive Than FERG
FLS is trading at a forward 12-month price-to-earnings ratio of 13.97X, below its median of 17.06X over the last three years. FERG’s forward earnings multiple sits much higher at 22.63X, above its median of 18.05X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
Ferguson’s strength in the U.S. and Canada segments has been diluted by the persistent weakness in its residential market. Also, FERG’s rising expenses and expensive valuation warrant a cautious approach for existing investors.
In contrast, Flowserve’s robust momentum in the Pump and Flow Control Division segments, solid backlog level and 3D initiatives bode well for solid growth in the quarters ahead. However, increasing operating expenses might hurt its margin profile. Nevertheless, FLS’ attractive valuation is more appealing and healthy estimates instill confidence.
Both the industrial companies currently carry a Zacks Rank #3 (Hold), which makes choosing one stock a difficult task. Considering their long-term prospects, revenue growth potential and valuation, FLS seems to have an edge over FERG currently. While FLS carries a VGM of B, FERG has a VGM of C.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.