TRG | The Bottom Line – 1/29

Given all of the GameStop hysteria from this week, the classic David vs. Goliath story that fixed the attention of Wall Street and Main Street alike, we are reminded once again for TRG to “stick to our knitting.” Primary research may not make the same type of splashy headlines, but ultimately, fundamental research helps to connect the dots and unlock real value. Last week TRG refocused on a new idea we initiated coverage in July 2019 – Ferguson (FERG), the largest company Wall Street had seemingly heard never of. A recent series of institutional investor calls with FERG top management prompted us to revisit our valuation. When TRG initiated coverage of FERG in July 2019, we had established a 12-month valuation range of $94-$111, and the stock at the time of the publication of our report stood at $121.47. The world (and Ferguson) has changed meaningfully since 2019, which begs the question where the stock can go from here. We forecasted out over the next 3-5 years (vs. 3-5 days!), focusing on key drivers for growth (top line & margin) and revisiting the best basket of comps for FERG going forward. It is this type of work we think Wall Street to refocus.