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Investors in Ferguson plc (NYSE:FERG) had a good week, as its shares rose 9.2% to close at US$164 following the release of its annual results. The result was positive overall - although revenues of US$30b were in line with what the analysts predicted, Ferguson surprised by delivering a statutory profit of US$9.12 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Ferguson
Following last week's earnings report, Ferguson's 21 analysts are forecasting 2024 revenues to be US$29.7b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$9.15, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$29.5b and earnings per share (EPS) of US$8.90 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$171, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Ferguson, with the most bullish analyst valuing it at US$193 and the most bearish at US$106 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Ferguson shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ferguson's past performance and to peers in the same industry. We would highlight that Ferguson's revenue growth is expected to slow, with the forecast 0.05% annualised growth rate until the end of 2024 being well below the historical 8.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that Ferguson is also expected to grow slower than other industry participants.