FERG
Ferguson plc
$233.19
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 33.5% above fair value
You pay
$233.19
Bear
$125.41
Fair
$174.67
Bull
$221.85
Bear
$125.41
-46.2%
5% stage 1 growth, 11% discount
Fair
$174.67
-25.1%
9% stage 1 growth, 11% discount
Bull
$221.85
-4.9%
12% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
31.9x
Market is pricing in (growth)
15.2%
vs 9.1% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $288.60 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $174.67 per share.
Warnings
Wall Street's average price target is $288.60 (from 15 analysts). Our estimate is 53% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions