1. Setup Recap
Ferguson reported before the open on Tuesday, Dec. 9.
The pre-earnings call was for a down gap (~-7%) with medium confidence (60%), expecting a miss with in-line guidance.
2. What Actually Happened
The quarter was mixed versus expectations:
- EPS: $2.84 vs $2.97 forecast (miss).
- Revenue: $8.2B vs $8.09B forecast (beat).
- Outlook: maintained ~5% full-year sales growth framing and guided operating margin 9.4%–9.6% (commentary read as slightly better on margins).
3. Price Action
- Prior close (Mon): $245.80
- Open (Tue): $232.60 → -5.4% gap
- Close (Tue): $226.02 → -8.0% close-to-close
No reversal — it stayed a sell-the-print day.
4. Attribution: Why It Moved
Even with revenue ahead of forecast, the stock traded the miss:
- EPS came in below forecast, which often gets interpreted as margin/operating leverage sensitivity.
- With the stock having had a strong run into the print, the miss created a clean excuse to de-risk.
- Guidance didn’t overwhelm the EPS disappointment — it helped, but not enough to flip the tape.
5. What Worked / What Didn’t
What worked:
- Directional call (down) was right on gap and close.
- The “miss” emphasis captured the market’s scoring method (EPS > revenue for this tape).
What didn’t:
- Underestimated how much the market would ignore the revenue beat.
6. Lessons & Playbook Updates
- For distributors, EPS/margin optics can dominate even when top line is fine.
- When the stock has already had a strong pre-earnings run, treat a modest EPS miss as capable of producing an outsized down day.
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