Can Ferguson avoid crumbling from its current highs following next Tuesday’s full year results?
For a while the multinational buildings materials firm’s 2018 was nothing special. Opening at £53.51, the stock found itself trading under £52.50 for a decent chunk of the first quarter, with a nadir of £50.25 in early February. However, from mid-April onwards Ferguson PLC has gone on quite the rally, culminating in a record of, and current trading price, of £65.59 - a 22.5% increase in around 9 months.
Back in June the firm posted a decent set of third quarter figures. The USA remained its shining star, with an 11.5% increase in revenue to $4.1 billion more than compensating for the 10.9% slide in the UK. The troubles in the UK were largely down to the closure of branches and the exit of the low margin wholesale business towards the end of the first half as previously announced, with like-for-like revenue actually up 0.7% in the region.
Overall this left total Q3 organic revenue growth at 7.1% to $5.08 billion, with trading profit climbing 17.1% to $356 million. As for the fourth quarter, Ferguson said that it had ‘started well’ with ‘organic revenue growth in line with the third quarter’.
In terms of Tuesday’s full year statement, investors will want Ferguson to confirm the 7%-plus organic revenue growth it has managed throughout 2018, alongside another healthy jump in statutory pre-tax profit after the half year figure rose 7.5% to $598 million. Any guidance on the newly restructured UK business will also be welcome.
Ferguson Plc (LON:FERG) has a consensus rating of ‘Buy’ alongside an average target price of £60.56.
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