Ferguson vs Home Depot Which Offers More Value?

Ferguson and Home Depot are two well-known companies in the home improvement industry. Ferguson is a leading distributor of plumbing and heating products, while Home Depot is a popular retailer of home improvement and construction products. Both companies have seen impressive growth in recent years, with Ferguson's stock price outperforming Home Depot's. Investors may be interested in comparing the two stocks to determine which presents a better investment opportunity based on financial performance, market trends, and long-term growth potential.

Ferguson or Home Depot?

When comparing Ferguson and Home Depot, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Ferguson and Home Depot.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Ferguson has a dividend yield of 1.66%, while Home Depot has a dividend yield of 2.17%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Ferguson reports a 5-year dividend growth of -13.14% year and a payout ratio of 46.95%. On the other hand, Home Depot reports a 5-year dividend growth of 15.20% year and a payout ratio of 60.05%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Ferguson P/E ratio at 22.67 and Home Depot's P/E ratio at 28.11. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Ferguson P/B ratio is 6.76 while Home Depot's P/B ratio is 70.98.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Ferguson has seen a 5-year revenue growth of 0.71%, while Home Depot's is 0.61%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Ferguson's ROE at 30.36% and Home Depot's ROE at 447.13%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $190.28 for Ferguson and $413.18 for Home Depot. Over the past year, Ferguson's prices ranged from $183.63 to $225.63, with a yearly change of 22.87%. Home Depot's prices fluctuated between $323.77 and $439.37, with a yearly change of 35.70%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.