Ferguson Earnings Offer Optimism on the Economy. The Stock Is Still Down.

Coming into Tuesday trading, Ferguson stock was up 42% this year. (Courtesy Ferguson Enterprises, Inc.)

Key Points

• Ferguson Enterprises reported adjusted earnings per share of $2.84, a 15.9% increase year over year, on sales of $8.2 billion.
• Nonresidential sales growth was 12% year over year, following 15% growth in the prior quarter, indicating a potential tailwind.
• Despite strong results, Ferguson shares fell 8.1% to $226.02, possibly due to profit-taking after a 42% year-to-date gain.

Investors have a bunch of worries about the economy heading into 2026, including AI spending, interest rates, and housing markets. Perhaps a distributor of plumbing supplies can help dispel some fears.

The distributor is Ferguson Enterprises . It reported quarterly results on Tuesday. The company reported adjusted earnings per share of $2.84, up 15.9% year over year, from sales of $8.2 billion, up 5.1% year over year. Wall Street was looking for $2.64 and $8 billion, respectively. It’s a quarterly beat.

This was the quarter ended in October 31. Ferguson is changing its year end from July to December, so some comparisons will feel a little odd soon.

“We are poised to deliver a strong calendar year 2025 performance and we remain confident in our markets over the medium term,” said CEO Kevin Murphy. “While we continue to operate in an uncertain environment, we will stay focused on leveraging multiyear tailwinds in both residential and nonresidential markets as we support the complex project needs of the water and air specialized professional.”

To be sure, there is uncertainty, but nonresidential sales growth was up 12% year over year after 15% growth the prior quarter. “One data point does not make a trend, but two should give investors a bit more confidence that large [nonresidential] capital project strength was not a one-off, but instead a real tailwind that could persist entering Calendar Year 2026,” wrote Bernstein analyst Connor Cerniglia in a Tuesday note.

That’s good news for investors that might worry infrastructure or AI-related spending could slow.

Cerniglia rates shares Buy and has a $288 price target for the stock.

The quarter looks solid, but Ferguson shares fell 8.1% to $226.02 on Tuesday, while the S&P 500 and Dow Jones Industrial Average dropped 0.1% and 0.4%, respectively.

Investors don’t appear as happy as Cerniglia with the quarter. Guidance, which only impacts the final two months of 2025, was largely unchanged, with expectations for profit margins tweaked higher to a midpoint of 9.5% from 9.4%.

“Stock down despite strong beat,” William Blair analyst Ryan Merkel wrote Tuesday. “We recommend investors buy.” He rates the shares Outperform and doesn’t have a price target for the stock. An Outperform rating at Blair essentially means the firm expects the stock to outperform the market.

The Tuesday stock price reaction might boil down to profit-taking. Coming into Tuesday trading, Ferguson’s stock was up 42% this year.

Profit-taking aside, at least Ferguson’s nonresidential business remains solid. That’s welcome news for all investors.

Write to Al Root at allen.root@dowjones.com