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SiteOne (SITE) Stock Rises 63% YTD: What's Driving the Rally?

Zacks Equity Research

Price performance of SiteOne Landscape Supply, Inc. SITE has been impressive since the beginning of 2019, which is evident from a 62.6% increase in its share price. Solid financial performance, healthy fundamentals and growth opportunities supported positive market sentiments for the company.

The Roswell, GA-based company, with $3.6 billion of market capitalization, belongs to the Zacks Industrial Services industry, which in turn belongs to the Zacks Industrial Products sector. It currently sports a Zacks Rank #2 (Buy) and has a VGM Score of B.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Year to date, SiteOne has outperformed its industry’s growth of 3.9%, the sector’s rise of 19.1% and the S&P 500’s rally of 22.8%.

Factors Driving the Stock

We believe that the company’s share price has gained momentum on better-than-expected results for two of the last four quarters. Average positive earnings surprise for the last four quarters was 2.86%.

Notably, the company’s earnings in the last reported quarter surpassed estimates by 9.46%, while sales beat the same by 0.48%. Organic sales improved for end-markets and products, driven by improved weather conditions.

The company is gaining from the solid product portfolio and healthy demand in end markets served. Also, it is benefiting from commercial and operational actions related to pricing, supply chain, category management, marketing and e-commerce, and others. These actions are aimed at improving margins.

The acquisitive nature of SiteOne has been boosting growth as well. In the first nine months of 2019, the company made eight acquisitions, with roughly $85 million in trailing 12 months’ (TTM) revenues. Notably, Trendset Concrete Products and Voss Materials buyouts were completed in the third quarter, and Design Outdoor was acquired in October. These three buyouts are predicted to boost SiteOne’s hardscape capabilities.

Moreover, the company is set to gain market shares on positive market trends and robust pipeline of acquisitions. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) are anticipated to be $197-$203 million in 2019, suggesting growth of 12-15% from the previous year. Also, EBITDA margin is expected to increase in the year.

Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $2.00 for 2019 and $2.29 for 2020, marking growth of 14.3% and 8.5% from the respective 60-day-ago figures. Such positive revisions in earnings estimates are reflective of positive sentiments for the company.

SiteOne Landscape Supply, Inc. Price and Consensus


SiteOne Landscape Supply, Inc. Price and Consensus
SiteOne Landscape Supply, Inc. Price and Consensus

SiteOne Landscape Supply, Inc. price-consensus-chart | SiteOne Landscape Supply, Inc. Quote

SiteOne’s Performance Versus Three Peers

The company has outperformed many peers so far in 2019. Three such stocks are DMC Global Inc BOOM, Harsco Corporation HSC and W.W. Grainger, Inc GWW, with respective year-to-date gains of 35.5%, 15.6% and 13.5%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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DMC Global Inc. (BOOM) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
SiteOne Landscape Supply, Inc. (SITE) : Free Stock Analysis Report
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