Ferguson (FERG) Financials

Ferguson’s recent quarterly results show a business that is still profitable and generating solid operating cash flow, but with some signs of margin pressure and a more leveraged balance sheet than a year ago. Revenue has been fairly resilient over the last four quarters, but earnings and cash generation have been somewhat uneven, while debt has increased and cash has been more volatile.

• Revenue remains high and relatively stable. Quarterly revenue ranged from about $6.7 billion to $8.5 billion over the last four reported quarters, with Q1 2026 revenue at $7.5 billion.
• The company continues to generate meaningful profits. Net income was $414 million in Q1 2026, compared with $700 million in Q4 2025 and $410 million in Q3 2025.
• Operating cash flow is still healthy. Ferguson produced $772 million in operating cash flow in Q1 2026, after $541 million in Q4 2025 and $682 million in Q3 2025.
• Gross profit dollars remain strong. Q1 2026 gross profit was $2.32 billion, supported by a gross margin of roughly 31.0%.
• The company is continuing to return capital to shareholders. Ferguson paid dividends and repurchased shares in each recent quarter, signaling ongoing shareholder returns.
• EPS has been fairly steady, but not growing rapidly. Diluted EPS was $2.13 in Q1 2026, up from $2.07 in Q3 2025, but below $3.53 in Q4 2025.
• Working capital swings are affecting cash flow quarter to quarter. Changes in operating assets and liabilities have moved materially from quarter to quarter, which can make cash flow less predictable.
• The company completed acquisitions, but the amounts were modest relative to revenue. Acquisition spending ranged from $10 million to $196 million in the recent quarters shown.
• Operating margin compressed in Q1 2026. Operating income fell to $612 million on $7.47 billion of revenue, implying an operating margin of about 8.2%, down from about 10.9% in Q4 2025.
• Debt has increased over the past year. Long-term debt rose to $4.0 billion in Q1 2026 from $3.4 billion in Q1 2025, and total liabilities also climbed.
• Liquidity is not especially strong. Cash and equivalents were $820 million in Q1 2026 versus $5.7 billion in total liabilities? Actually current liabilities alone were $5.70 billion, leaving limited cash relative to near-term obligations.
• Share repurchases and dividends are using a lot of cash. In Q1 2026, Ferguson spent $236 million on buybacks and $174 million on dividends, while also carrying substantial debt service.
• Other income/expense and interest costs continue to weigh on pretax results. Q1 2026 had $45 million of interest expense and $52 million of net other expense, reducing pretax income.

Bottom line: Ferguson appears to be a profitable, cash-generative distributor with a strong market position, but the latest quarters show some margin pressure and a balance sheet that relies on continued operating performance. For investors, the key things to watch are whether revenue growth can translate into better margins and whether debt levels stay manageable while the company keeps buying back stock and paying dividends.