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Ferguson Plc EBITDA surged on 19.8% and EBITDA Margin increased slightly on 1.6 pp from 7.7% to 9.3%

29 Sep 2020 • About Ferguson Plc ($FERG) • By InTwits

Ferguson Plc reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Ferguson Plc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 1.0%.
  • CAPEX is quite volatile: £6m in FY2020, £8m in FY2019, £1m in FY2018, £1m in FY2017, £1m in FY2016
  • The company has highly profitable business model: ROIC is 17.8%
  • It operates with medium-size leverage: Net Debt/EBITDA is 1.2x while industry average is 1.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue decreased slightly on 0.87%. During FY2016-FY2020 Revenue growth topped in FY2018 at 7.6% and was decelerating since that time. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 7.7% to 9.3% in FY2020.

Gross Margin showed almost no change in FY2020. Gross Margin stuck to a growing trend at 0.20 pp per annum in FY2016-FY2020.

Net Income margin decreased slightly on 0.63 pp from 5.0% to 4.4% in FY2020.

Investments (CAPEX, working capital and M&A)

In FY2020 the company had CAPEX/Revenue of 0.99%. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 1.3%.

Return on investment

The company operates at high and attractive ROE (22.0%) while ROIC is a bit lower (17.8%). ROIC decreased on 3.5 pp from 21.3% to 17.8% in FY2020. ROE decreased on 4.3 pp from 26.4% to 22.0% in FY2020.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.2x and Debt / EBITDA is 2.2x. Net Debt / EBITDA surged on 0.5x from 0.7x to 1.2x in FY2020. Debt jumped on 92.4% while cash jumped on 86.7%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2017 at 0.4x and was growing since that time.

Ferguson Plc has no short term refinancing risk: cash is higher than short term debt (260.5%).

Management team

The company's CEO is Kevin Murphy. Kevin Murphy has 1 year tenure with the company. The company's CFO is Mike Powell. Mike Powell has 1 year tenure at the company.

Financial and operational results

Ferguson Plc ($FERG) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit5,2575,5836,0446,4586,421-0.6%
Net Income9659201,2671,108961-13.3%
Balance Sheet
Short Term Debt9332,154386548121,403.7%
Long Term Debt1,5901,1031,5252,2963,70961.5%
Cash flow
Revenue growth-11.8%5.0%7.6%6.1%-0.9%
EBITDA growth-3.7%30.4%-15.7%5.3%19.8%

Gross Margin28.6%29.0%29.1%29.3%29.4%0.1%
EBITDA Margin8.0%9.9%7.7%7.7%9.3%1.6%
Net Income Margin5.3%4.8%6.1%5.0%4.4%-0.6%
CAPEX, % of revenue1.5%1.0%1.3%1.7%1.0%-0.8%

Net Debt/EBITDA0.9x0.4x0.7x0.7x1.2x0.5x

Peers in Trading Companies & Distributo

Below we provide Ferguson Plc benchmarking against other companies in Trading Companies & Distributo industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.