Ferguson share price dips amid slower sales growth

Ferguson share price dips amid slower sales growth
Written by:
Tsveta van Son
10th June 2019
Updated: 17th September 2019

Ferguson’s share price (LON:FERG) has fallen deep into the red in London in today’s session, as the company reported slower sales growth in the third quarter of its financial year. The company, however, tried to cheer up investors with a $500-million share buyback.

As of 09:40 BST, Ferguson’s share price had given up 4.97 percent to 5,082.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.54 percent higher at 7,371.21 points. The group’s shares have given up about 4.5 percent of their value over the past year, as compared with about a four-percent fall in the Footsie.

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Ferguson updates on performance

Ferguson announced in a statement today that its ongoing revenue had grown 6.2 percent in the three months ended April 30, and 2.7 percent higher on an organic basis. Proactive Investors reports that the result compares with top-line growth of 8.2 percent and organic growth of 6.5 percent in the first half of the company’s financial year.

Ongoing trading profit meanwhile came in at $359 million, or $8 million ahead of last year. The company further announced a share buyback of $500 million.

“We are confident that Ferguson will continue to make progress as we remain firmly focused on delivering superior customer service,” Ferguson’s chief executive John Martin commented in the statement, adding that the company expected to generate ongoing trading profit  in the year ended July 31 in line with current analysts’ consensus forecasts.

Analysts on FTSE 100 company

“Management has chosen not to blame the weather, but we note that US rainfall in the quarter was exceptional, which has disrupted construction somewhat, at the same time as there was a natural lull in growth rates caused in part by the rising rate environment at the end of the 2018 calendar year,” Liberum pointed out, as quoted by Proactive Investors.

As of May 31, the consensus forecast amongst 22 polled investment analysts covering the FTSE 100 group for the Financial Times has it that the company will outperform the market. According to MarketBeat, the company currently has a consensus ‘buy’ rating, while the average target for Ferguson’s share price stands at 5,895.50p.

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