FERGUSON ENTERPRISES INC (NYSE:FERG) Q1 2025 Earnings: EPS Beats, Revenue Slightly Misses Amid Diverging Market Conditions

Ferguson Enterprises Inc (NYSE:FERG) reported financial results for its fiscal first quarter, ended October 31, 2025, delivering a performance that largely met Wall Street's expectations for the top line while exceeding profit forecasts. The distributor of plumbing and HVAC products continues to navigate a bifurcated market, with strength in non-residential construction offsetting persistent softness in residential segments.

Earnings and Revenue Versus Estimates

The company's results presented a mixed but generally positive picture against analyst consensus. Revenue came in slightly below expectations, while profitability metrics surpassed forecasts.

• Revenue: Reported net sales of $8.169 billion, representing a 5.1% increase year-over-year. This figure was marginally below the analyst consensus estimate of approximately $8.191 billion.
• Earnings Per Share (Adjusted): The company reported adjusted diluted earnings per share (EPS) of $2.84. This result comfortably exceeded the analyst estimate of $2.62, marking a 15.9% increase from the $2.45 reported in the same quarter last year.

The ability to grow earnings at a significantly faster pace than sales highlights effective margin management. The company noted a gross margin expansion of 60 basis points to 30.7%, driven by disciplined execution and cost control, which flowed through to the bottom line.

Market Reaction and Price Action

The immediate market reaction to the earnings release appears muted to slightly negative in pre-market trading. This suggests investors are weighing the modest revenue miss against the stronger-than-expected profit performance. The stock's recent performance has been relatively flat, with minor declines over the past week and month, indicating a lack of strong directional momentum leading into the report. The subdued reaction may reflect the company's characterization of operating in a "challenging market environment" and the ongoing uncertainty it cited.

Key Takeaways from the Quarterly Report

The earnings release underscored several critical dynamics within Ferguson's business:

• Diverging End Markets: The performance starkly differed between residential and non-residential sectors. U.S. residential revenue, representing about half of the domestic business, declined by 1% amid weak housing starts and soft repair and maintenance activity. Conversely, U.S. non-residential revenue grew by 12%, driven by share gains in waterworks and commercial/mechanical projects, including large capital projects.
• Updated Full-Year Guidance: Management provided updated calendar 2025 (Fiscal 2026) guidance, refining previous ranges. The outlook now calls for approximately 5% net sales growth (updated from "mid-single digit growth") and an adjusted operating margin between 9.4% and 9.6% (narrowed from 9.2%-9.6%). This sales guidance aligns closely with the current analyst consensus estimate for the full year.
• Strong Financial Position and Capital Return: The company maintains a robust balance sheet, with a net debt to adjusted EBITDA ratio of 1.1x. During the quarter, Ferguson returned significant capital to shareholders, repurchasing $208 million of stock and declaring a quarterly dividend of $0.89 per share, a 7% increase year-over-year.
• Geographic Performance: The U.S. business, which constitutes the vast majority of sales, drove results with a 5.3% sales increase and a 15.6% jump in adjusted operating profit. The smaller Canadian segment saw more subdued growth of 2.2%, with profits declining due to a softer market.

Looking Ahead

CEO Kevin Murphy expressed confidence in the company's medium-term markets and its ability to leverage "multiyear tailwinds." The updated full-year guidance suggests management expects steady, if not spectacular, growth. For the upcoming quarter, analysts are currently estimating revenue of approximately $7.78 billion and EPS of around $2.49. Ferguson's ability to continue outperforming in non-residential markets while managing costs will be key to meeting these expectations.

For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can view more on the Ferguson earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.