Critical Analysis: ZKH Group (NYSE:ZKH) versus Ferguson (OTCMKTS:FERGY)

Ferguson (OTCMKTS:FERGY) and ZKH Group (NYSE:ZKH) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Earnings and Valuation

This table compares Ferguson and ZKH Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferguson	$27.54 billion	9.76	$961.00 million	$0.65	183.83
ZKH Group	$2.77 billion	0.16	-$43.00 million	($0.35)	-9.77

Ferguson has higher revenue and earnings than ZKH Group. ZKH Group is trading at a lower price-to-earnings ratio than Ferguson, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ferguson and ZKH Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferguson	0	0	0	0	0.00
ZKH Group	0	0	2	0	3.00

ZKH Group has a consensus target price of $12.65, suggesting a potential upside of 269.88%. Given ZKH Group’s stronger consensus rating and higher probable upside, analysts clearly believe ZKH Group is more favorable than Ferguson.

Profitability

This table compares Ferguson and ZKH Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ferguson	N/A	N/A	N/A
ZKH Group	-2.47%	-6.86%	-3.11%

Institutional & Insider Ownership

0.2% of Ferguson shares are owned by institutional investors. Comparatively, 9.5% of ZKH Group shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Ferguson beats ZKH Group on 8 of the 12 factors compared between the two stocks.

About Ferguson

Ferguson plc distributes plumbing and heating products in the United States, the United Kingdom, Canada, and Central Europe. It offers plumbing and heating solutions to customers in the residential, municipal, civil and industrial markets, and commercial sectors for repair, maintenance, and improvement (RMI), as well as new construction markets. The company also distributes pipes, valves, fittings, hydrants, meters, and related water management products, as well as offers related services, such as water line tapping and pipe fusion services. In addition, it distributes heating, ventilation, air conditioning, refrigeration equipment, and parts and supplies to specialist contractors in the residential and commercial markets for repair and replacement; and PVF products to industrial customers. Further, the company fabricates and supplies fire protection systems and bespoke fabrication services to commercial contractors for new construction and renovation projects, as well as offers products, services, and solutions to enable maintenance of facilities across various RMI markets. Additionally, it offers supply chain management solutions for PVF; and industrial maintenance, repair, and operations specializing in delivering automation, instrumentation, engineered products, and turn-key solutions. The company also sells its home improvement products directly to consumers, as well as through a network of online stores. In addition, it operates its B2B business primarily under the Ferguson brand; and B2C business under the Build.com brand. Further, the company provides products and services for maintenance of multi-family properties, government agencies, hospitality, education, healthcare, and other facilities. It operates a network of 2,194 branches and 19 distribution centers. Ferguson plc was founded in 1887 and is headquartered in Wokingham, the United Kingdom.

About ZKH Group

ZKH Group Limited develops and operates a maintenance, repair, and operating (MRO) products trading and service platform that offers spare parts, chemicals, manufacturing parts, general consumables, and office supplies in the People’s Republic of China. The company provides MRO procurement and management services; digitalized MRO procurement solutions; and logistics and warehousing services. It also engages in the production and sale of intelligent warehousing equipment. ZKH Group Limited was founded in 1998 and is based in Shanghai, the People’s Republic of China.