FERG
Ferguson plc
$220.04
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 60.8% above fair value
You pay
$220.04
Bear
$109.44
Fair
$136.80
Bull
$164.16
Bear
$109.44
-50.3%
$9.12 × 12x P/E
Fair
$136.80
-37.8%
$9.12 × 15x P/E
Bull
$164.16
-25.4%
$9.12 × 18x P/E
Adjust Assumptions
15.0x
9.12$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
24.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (17 analysts)
$282.90
Divergence from AlphaVal
52%
Summary
Applying a 15x P/E to adjusted EPS of $9.12, the base-case value is $136.80 per share.
Warnings
The company's reported profits differ from official accounting profits by 166%. Check what costs are being left out of the adjusted number.
The company pays out 104% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $282.90 (from 17 analysts). Our estimate is 52% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples