Ferguson Enterprises Inc. (FERG) is staging a remarkable comeback that savvy investors need to watch closely. As North America’s largest distributor of plumbing and HVAC products, Ferguson operates a vast network of over 1,500 locations and thousands of delivery vehicles across the U.S. and Canada. But what sets Ferguson apart isn’t just scale—it’s their strategic pivot towards digital transformation and operational efficiency that’s driving renewed momentum.
A Tale of Two Earnings Reports: From Setback to Surge
Back in December 2024, Ferguson’s earnings report rattled the market. Operating margins slipped from 10% to 9.1%, EBITDA declined, and net income took a hit. The market reacted swiftly, pushing the stock below its 200-day moving average and off many watchlists, including ours. Compounding the pressure was the uncertainty from trade tensions, which weighed on industrial stocks broadly.
Fast forward six months, and the narrative has flipped. In their June 2025 earnings, Ferguson not only beat Wall Street’s revenue and EPS expectations but also reported a 20% year-over-year jump in EBITDA. Operating margins improved slightly to 9.4%, and net sales grew 4.3%. Crucially, Ferguson’s cost-cutting measures—eliminating 800 positions—are projected to save $100 million annually, enhancing profitability. The company also boosted its dividend by 5% and authorized a substantial $1.1 billion share buyback, having already repurchased $759 million in 2025.
What This Means for Investors
This turnaround isn’t just about recovering lost ground. Ferguson’s ability to combine digital innovation with traditional distribution is a blueprint for resilience in industrial sectors. Their expanding e-commerce platforms and value-added services—like on-site consultation and logistics support—position them well to capture market share as customers increasingly demand seamless, tech-enabled solutions.
Momentum is a powerful force in investing. As we’ve seen, stocks that regain upward momentum after a sustained downtrend often continue to climb. Ferguson’s recent breakout from a downtrend, supported by improving fundamentals and cost discipline, signals a potential sustained rally.
Technical Setup: Eyes on the Cup-and-Handle
From a technical perspective, Ferguson appears to be forming a classic cup-and-handle pattern—a bullish indicator suggesting a breakout is imminent. The stock is consolidating tightly between $220 and $225. A decisive move above this range, especially on strong volume, could trigger a significant run higher.
Investors should consider a logical trailing stop near $200. This level aligns with key support zones created by earlier price gaps and serves as a risk management checkpoint. Holding above $200 keeps the bullish thesis intact, while a breakdown below could signal a trend reversal.
What’s Next? Strategic Moves for Investors and Advisors
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Monitor Earnings and Guidance: Ferguson’s management projects low to mid-single-digit sales growth with stable operating margins. Investors should watch upcoming earnings for confirmation of this outlook and any updates on digital expansion initiatives.
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Evaluate Valuation in Context: Despite recent gains, Ferguson’s valuation remains reasonable relative to peers, especially considering its growth trajectory and cost savings. This makes it an attractive candidate for both growth and income-focused portfolios.
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Incorporate Momentum Signals: Advisors should integrate momentum analysis into their stock selection process. Ferguson exemplifies how momentum combined with strong fundamentals can identify turnaround opportunities early.
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Watch Industry Trends: The HVAC and plumbing sectors are benefiting from increased infrastructure spending and a push for energy-efficient solutions. Ferguson’s digital capabilities uniquely position it to capitalize on these trends, making it a bellwether for industrial innovation.
A Unique Insight: The ESG Angle
One angle often overlooked is Ferguson’s potential in the ESG (Environmental, Social, Governance) space. With growing regulatory and consumer focus on sustainability, Ferguson’s investments in efficient logistics and digital tools reduce waste and carbon footprint. This ESG alignment could unlock new institutional interest and premium valuations, a factor not yet fully priced into the stock.
Final Takeaway
Ferguson Enterprises is not just recovering—it’s evolving. For investors, this is a textbook example of how disciplined cost management, digital transformation, and momentum can combine to create compelling investment opportunities. As always, prudent risk management is key, but those who position themselves now could benefit from Ferguson’s next leg up.
Stay tuned to Extreme Investor Network for ongoing coverage and exclusive insights on Ferguson and other momentum-driven industrial plays. The market is shifting, and Ferguson is leading the charge. Are you ready to move with it?
Source: An under-the-radar industrial forming a textbook cup-and-handle pattern