Stock Profile: Ferguson

Most consumers only put thought into plumbing or air conditioning when it isn’t working well. But that’s not the case for the people responsible for keeping those residential, commercial, and large-scale infrastructure systems running. 

Ferguson is a specialty distribution company servicing plumbing, HVAC, infrastructure, and related markets primarily in the United States. With more than 3,600 suppliers and an estimated 1 million customers, the company has a diverse sales and acquisition model.

This stock reflects Clean Yield’s historical approach to identifying under-the-radar companies with strong, well-run businesses, and consistent profitability.

Ferguson has set public environmental objectives, funds a philanthropic arm of its business, invests in education opportunities for people working in the industries it serves, and has a positive record as an employer. While it may not be a standout at first glance, Ferguson has made a splash with its sustainability efforts.

Current Snapshot: Expanding into U.S. Markets with a Balanced Sales Model

Historically, Ferguson was a British company that also served European markets. After shifting focus and disposing of European assets, the company now has 95% of its sales in the U.S. 

Sales are balanced between new construction (40%) and repair and maintenance (60%), as well as residential (52%) and nonresidential (48%), providing balanced exposure to macroeconomic trends. The target market is contractors, but Ferguson also has a small, high-quality, consumer-oriented online shop. Ferguson serves these markets with an expanding national distribution and branch network and an owned distribution vehicle network. The company has also successfully been tucking in several small acquisitions each year as part of the business model.  

The primary potential risks the company faces are increasing competition and  a continued slowdown in new construction.

Social and Environmental Impact Review

Ferguson has set some goals regarding scope 1, 2, and 3 carbon emissions, including the commitment to reduce scope 1 and 2 emissions by 35% per million USD of revenue by 2026 (against a 2019/2020 baseline). According to the company’s 2024 ESG report, Ferguson achieved a 50% reduction in scope 1 and 2 emissions two years ahead of schedule.

This goal was largely achieved as a result of the company signing a Virtual Power Purchase Agreement with ENGIE North America in FY2023 for a portion of the electricity generated by the Century Oak wind project in Callahan County, Texas. Ferguson’s portion of the project generated 144,264 MWh of wind energy, or 59% of the company’s FY2024 electricity usage.

Ferguson is currently running a medium- and heavy-duty electric truck pilot in California to help determine whether EV technology has matured to the point where the company can implement it widely with minimal disruption to the business. In FY2023, Ferguson worked with local and regional leadership to build electric vehicle (EV) charging infrastructure and ensured proper electrical capacity at five Ferguson branches in the state.

Through Ferguson Cares, the company has teamed up with industry organizations, community colleges, and local career and technical education schools to help grow the number of skilled trades professionals.

Ferguson has worked to expand the skilled trades talent pool through its efforts with organizations like the National Association of Women in Construction and its founding sponsorship of Women in Plumbing and Piping. Additionally, the company has built or refurbished a dozen skilled trades labs across the country with the nonprofit Explore The Trades, reaching more than 1,000 students nationwide — keeping talent flowing smoothly into the field.