01. Ferguson Enterprises Inc. (NYSE:FERG)
Number of Hedge Fund Holders: 54
Ferguson Enterprises Inc. (NYSE:FERG), a leading distributor of plumbing and heating products in North America, stands out as a compelling choice for investors looking for opportunities in the industrial distribution sector. The company’s robust business model and strategic focus on customer solutions make it a top contender in the market. As of Q2 2024, Ferguson Enterprises Inc. (NYSE:FERG) had 54 hedge fund holders, a slight decrease from 55 in the previous quarter, indicating sustained institutional interest in its stock.
In the fourth quarter of fiscal 2024, Ferguson Enterprises Inc. (NYSE:FERG) reported impressive earnings, exceeding expectations with an EPS of $2.98 compared to a consensus of $2.85. This reflects a 7.6% increase from the previous year, demonstrating the company’s resilience amid a challenging market characterized by deflation and fluctuating demand. The company achieved revenues of $7.9 billion, up 1.4% year-over-year, highlighting its ability to navigate economic pressures effectively.
Ferguson Enterprises Inc. (NYSE:FERG) gross margin remained robust at 31%, driven by its value-added services and efficient cost management. The adjusted operating profit for Q4 was $857 million, an increase of 5.3% over the prior year, resulting in an impressive adjusted operating margin of 10.8%. For the full fiscal year, Ferguson generated $29.6 billion in revenue, maintaining a gross margin of 30.5%. The company’s proactive approach to managing operating expenses resulted in an adjusted operating profit of $2.8 billion and a solid adjusted operating margin of 9.5%.
The strategic investments in capital expenditures totaling $372 million reflect Ferguson Enterprises Inc. (NYSE:FERG) commitment to enhancing its competitive advantages and expanding its market reach. Additionally, the company returned $1.4 billion to shareholders through dividends and share repurchases, underscoring its strong cash generation capabilities and shareholder-friendly policies.
Ferguson Enterprises Inc. (NYSE:FERG) balanced exposure to both residential and non-residential markets has allowed it to mitigate risks associated with market fluctuations. Despite facing headwinds, its unique multi-customer approach has positioned it well for continued growth. With a strong balance sheet and a proven track record of above-market growth, Ferguson Enterprises is poised to navigate future challenges successfully, making it one of the best industrial distribution stocks to buy now.
ClearBridge Mid Cap Strategy stated the following regarding Ferguson plc (NYSE:FERG) in its first quarter 2024 investor letter:
“We also added a new position in Ferguson plc (NYSE:FERG), a leading distributor of plumbing supplies and other products to plumbing and mechanical contractors, in the industrials sector. The company commands the largest market share in the industry, and primarily competes against small and localized competitors, creating a compelling opportunity for growth through a combination of market share gains and accretive acquisitions. We believe the company is uniquely positioned to win opportunities on nonresidential “mega” projects, as well as participate in any potential rebound in residential construction.”
While we acknowledge the potential of FERG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FERG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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