Ferguson Plc – Value Analysis (FRANKFURT:24W2) : December 29, 2017

Capitalcube gives Ferguson Plc a score of 59.

Our analysis is based on comparing Ferguson Plc with the following peers – Sunex SA, SolTech Energy Sweden AB, Thermador Holding SA and Ferguson PLC (SNX-PL, SOLT-SE, THEP-FR and FERG-GB).

Investment Outlook

Ferguson Plc has a fundamental score of 59 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It’s current Price/Book of 3.80 is about median in its peer group.
  • 24W2-DE‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • 24W2-DE‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • 24W2-DE‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high gross margin suggests some differentiation with pricing advantages versus peers.
  • 24W2-DE‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • 24W2-DE has additional debt capacity.

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Leverage & Liquidity

24W2-DE has additional debt capacity.

  • With debt at a reasonable 20.63% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 20.63%), and a well-cushioned interest coverage level of 20.43x, 24W2-DE has the capacity to borrow some more.
  • All 4 peers for the company have an outstanding debt balance.

24W2-DE has moved to a relatively high liquidity from an Quick & Able profile at the prior year-end.

  • 24W2-DE‘s interest coverage has increased 2.00 points from last year’s low but is still below its four-year average interest coverage of 24.46.
  • The increase in its interest coverage to 20.43x from 18.43x (in 2016) was also accompanied by an increase in its peer median during this period to 20.43x from 18.43x.
  • 24W2-DE‘s debt-EV is its highest over the last four years and compares to a low of 8.93% in 2013.
  • Like the interest coverage trend, the increase in its debt-EV (to 20.63% from 16.58%) was also accompanied by an increase in its peer median during this period (to 20.63% from 16.58%).

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Sunex SA 22.48 1.08 2.17 83.99
SolTech Energy Sweden AB 15.01 1.1 -1.96 -18.39
Thermador Holding SA 0.36 2.69 4463.63 3491.82
Ferguson PLC 20.63 1.43 20.43 39.43
Ferguson PLC 20.63 1.43 20.43 39.78
Peer Median 20.63 1.43 20.43 39.78
Best In Class 0.36 2.69 4463.63 3491.82

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Company Profile

Ferguson Plc operates as a holding company, which engages in distributing of plumbing and heating products. It also involved in supplying building and waterworks materials. The company brands include Ferguson, Build.com, Wolseley, Burdens, Plumb center, Parts center, Climate center, Pipe center, Stark, Silvan, Beijer, Neumann, Starkki, Reseau pro, Silverwood, Wasco, Tobler, and OAG. Ferguson was founded by Frederick York Wolseley in 1887 and is headquartered in Zug, Switzerland.


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