Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.7 |
| P/S | 9.4 |
| EV/EBITDA | 2.1 |
| Fwd P/E | 6.9 |
| PEG | 5.1 |
| Analyst target | 6.0 |
- ▸Forward P/E: 18.4x
- ▸PEG: 1.48
FERG · Why this verdict
Why Ferguson Enterprises (FERG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Quality metrics are below average, and no identifiable competitive moat has been found; in an industrial distribution business, the absence of a durable competitive advantage increases vulnerability to margin pressure if larger competitors or alternative sourcing channels intensify price competition. Quality breakdown | Gross margin expands to above 30% for 2 consecutive quarters based on reported financials, signaling a structural improvement in pricing power that would argue against the current no-moat characterization. | →Stable |
| CounterA strong financial health score and three consecutive earnings beats suggest the absence of a traditionally defined moat has not prevented the business from executing effectively and delivering consistent results; distribution scale and customer relationships may provide durability that scores understate. | ||
Approximately 95% of revenue is generated in the United States, meaning the company's financial results are highly sensitive to domestic construction activity, regulatory policy, and economic cycles; there is virtually no geographic diversification to buffer against a U.S.-specific demand downturn. Bear case | U.S. revenue as a share of total falls below 90% for 2 consecutive annual reporting periods as international operations grow, demonstrating that geographic diversification is progressing. | →Stable |
| CounterDeep penetration in the domestic market can confer advantages in customer relationships, logistics density, and local pricing power; the geographic concentration may reflect a deliberate focus strategy rather than a failure to diversify, particularly if domestic revenues continue to grow. | ||
The company has delivered three consecutive beats following a prior miss, including a substantial outperformance of roughly 24% two quarters ago and more recent beats of roughly 4% and 1%; this record suggests operational execution has improved and the business has regained its footing after the earlier shortfall. Earnings | EPS surprise remains above 0% in each of the next 2 reported quarters, confirming the positive execution pattern is durable. | →Stable |
| CounterThe two most recent beats were comparatively thin — roughly 4% and under 1% — which, combined with the preceding miss, may indicate that the outperformance cadence is normalizing toward the estimate rather than establishing a consistently strong pattern. | ||
With roughly 8.7% of headroom to the take-profit target and a reward-to-risk ratio of 1.67-to-1, the risk/reward structure is favorable at the current price; the stock has recently traded below its 200-day moving average, but that average is still rising at roughly 0.5% per month, consistent with a pullback within an ongoing uptrend rather than a confirmed breakdown. Momentum breakdown | The stock reclaims the 200-day moving average and advances to within 3% of the $256 take-profit target within 6 months, confirming the pullback was temporary. | →Stable |
| CounterIf the 200-day moving average itself begins to flatten or roll lower, the pullback-within-uptrend characterization would no longer hold, potentially extending the drawdown and eliminating the favorable risk/reward structure before the target is reached. | ||
Quality metrics are below average, and no identifiable competitive moat has been found; in an industrial distribution business, the absence of a durable competitive advantage increases vulnerability to margin pressure if larger competitors or alternative sourcing channels intensify price competition.
→StableQuality breakdown
- Expectation
- Gross margin expands to above 30% for 2 consecutive quarters based on reported financials, signaling a structural improvement in pricing power that would argue against the current no-moat characterization.
CounterA strong financial health score and three consecutive earnings beats suggest the absence of a traditionally defined moat has not prevented the business from executing effectively and delivering consistent results; distribution scale and customer relationships may provide durability that scores understate.
Approximately 95% of revenue is generated in the United States, meaning the company's financial results are highly sensitive to domestic construction activity, regulatory policy, and economic cycles; there is virtually no geographic diversification to buffer against a U.S.-specific demand downturn.
→StableBear case
- Expectation
- U.S. revenue as a share of total falls below 90% for 2 consecutive annual reporting periods as international operations grow, demonstrating that geographic diversification is progressing.
CounterDeep penetration in the domestic market can confer advantages in customer relationships, logistics density, and local pricing power; the geographic concentration may reflect a deliberate focus strategy rather than a failure to diversify, particularly if domestic revenues continue to grow.
The company has delivered three consecutive beats following a prior miss, including a substantial outperformance of roughly 24% two quarters ago and more recent beats of roughly 4% and 1%; this record suggests operational execution has improved and the business has regained its footing after the earlier shortfall.
→StableEarnings
- Expectation
- EPS surprise remains above 0% in each of the next 2 reported quarters, confirming the positive execution pattern is durable.
CounterThe two most recent beats were comparatively thin — roughly 4% and under 1% — which, combined with the preceding miss, may indicate that the outperformance cadence is normalizing toward the estimate rather than establishing a consistently strong pattern.
With roughly 8.7% of headroom to the take-profit target and a reward-to-risk ratio of 1.67-to-1, the risk/reward structure is favorable at the current price; the stock has recently traded below its 200-day moving average, but that average is still rising at roughly 0.5% per month, consistent with a pullback within an ongoing uptrend rather than a confirmed breakdown.
→StableMomentum breakdown
- Expectation
- The stock reclaims the 200-day moving average and advances to within 3% of the $256 take-profit target within 6 months, confirming the pullback was temporary.
CounterIf the 200-day moving average itself begins to flatten or roll lower, the pullback-within-uptrend characterization would no longer hold, potentially extending the drawdown and eliminating the favorable risk/reward structure before the target is reached.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ferguson has beaten earnings estimates in three consecutive quarters — including a roughly 24% outperformance two quarters ago — and offers roughly 8.7% upside to its analyst-derived take-profit target at a reward-to-risk ratio of 1.67-to-1; however, quality metrics are below average with no identifiable competitive moat, roughly 95% of revenue is concentrated in a single geography, and the stock has recently dipped below its 200-day moving average in what technicals characterize as a pullback within a still-rising uptrend rather than a confirmed breakdown.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.6/10data confidence 86%| Component | Sub-score |
|---|---|
| Gross margin | 2.1 |
| Op margin | 3.3 |
| Net margin | 3.1 |
| Current ratio | 6.4 |
| Moat | 3.9 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.4 |
| EPS growth | 6.6 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 6.8 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 1.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.3%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 8.0 |
| erm sentiment | 4.7 |
- ▸Analyst upside: 24%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.5 |
| quality rank | 6.5 |
| growth rank | 3.2 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.5 |
| support resistance | 6.6 |
| 52w position | 7.1 |
| gap | 5.0 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.2 |
| days to cover | 9.2 |
| volatility | 4.9 |
| put call | 6.7 |
| implied vol | 5.4 |
| beta | 6.5 |
| debt equity | 4.9 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 155.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- ASYMMETRY:1.8>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:37d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:3.2<4.5
Warning (0)
none
Reward-to-Risk
1.84
Upside
+11.2%
Downside
6.1%
Sizing output
AVOID
SetupRange Bound — RSI 52 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.2<4.5) reinforce the read. Current asymmetry R:R is 1.84 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.9, Risk (lower is worse) at 6.7, and Technical at 6.3; the weakest are Momentum at 3.2, Quality at 4.6, and Peer rank at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 1.84 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Three Consecutive Earnings Beats
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, reversing the recent 3-quarter positive streak.
- P2Us Geographic Revenue Concentration
Trip ifU.S. revenue as a share of total falls below 90% for 2 consecutive annual reporting periods, demonstrating meaningful geographic diversification.
- P3Favorable Risk Reward Pullback In Uptrend
Trip ifStock price advances above $248 without a corresponding analyst target revision above $260, reducing upside to take-profit below 4% and compressing the reward-to-risk ratio below 1.0.
- P4Quality Deficit No Competitive Moat
Trip ifGross margin expands above 30% for 2 consecutive quarters, demonstrating a structural improvement in pricing power that contradicts the no-moat assessment.