FERG
Ferguson plc
$223.31
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 35.9% above fair value
You pay
$223.31
Bear
$117.95
Fair
$164.28
Bull
$208.65
Bear
$117.95
-47.2%
5% stage 1 growth, 11% discount
Fair
$164.28
-26.4%
9% stage 1 growth, 11% discount
Bull
$208.65
-6.6%
12% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
30.7x
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 $274.63 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $164.28 per share.
Warnings
Wall Street's average price target is $274.63 (from 14 analysts). Our estimate is 50% 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