Unveiling the Investment Potential of SiteOne Landscape Supply Inc (SITE): A Comprehensive ...
SiteOne Landscape Supply Inc (NYSE:SITE) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $163.82, SiteOne Landscape Supply Inc has witnessed a daily gain of 3.95%, marked against a three-month change of 1.85%. A thorough analysis, underlined by the GF Score, suggests that SiteOne Landscape Supply Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
SiteOne Landscape Supply Inc has been assigned the following ranks:
Financial strength rank: 7/10
Profitability rank: 8/10
Growth rank: 9/10
GF Value rank: 7/10
Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in growth and momentum, and solid ranks in financial strength, profitability, and GF value, GuruFocus assigned SiteOne Landscape Supply Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding SiteOne Landscape Supply Inc's Business
SiteOne Landscape Supply Inc, with a market cap of $7.38 billion and sales of $4.18 billion, is one of the largest suppliers of tools and equipment. The company serves various businesses which include wholesale irrigation, outdoor lighting, nursery, landscape supplies, grass seeds, and fertilizers, turf protection products, turf care equipment, and golf course accessories for green industry professionals mainly in the United States and Canada. Its product portfolio includes irrigation supplies, fertilizer and herbicides, landscape accessories, nursery goods, natural stones and blocks, outdoor lighting and ice melt products and other products. The company's operating margin stands at 6.52%.
Financial Strength Breakdown
According to the Financial Strength rating, SiteOne Landscape Supply Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure.
The Interest Coverage ratio for SiteOne Landscape Supply Inc stands impressively at 10.78, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 5.49, SiteOne Landscape Supply Inc exhibits a strong defense against financial distress, highlighting its robust financial stability.
With a favorable Debt-to-Revenue ratio of 0.2, SiteOne Landscape Supply Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows SiteOne Landscape Supply Inc's impressive standing among its peers in generating profit.
SiteOne Landscape Supply Inc Operating Margin has increased (63.34%) over the past five years, as shown by the following data: 2018: 5.08; 2019: 5.30; 2020: 6.65; 2021: 9.03; 2022: 8.30; .
Furthermore, SiteOne Landscape Supply Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 32.10; 2019: 32.80; 2020: 33.33; 2021: 34.89; 2022: 35.41; . This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, SiteOne Landscape Supply Inc demonstrates a strong commitment to expanding its business.
The company's 3-Year Revenue Growth Rate is 16.7%, which outperforms better than 79.86% of 144 companies in the Industrial Distribution industry
Moreover, SiteOne Landscape Supply Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 30.3, and the rate over the past five years is 25.8. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given SiteOne Landscape Supply Inc's strong financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, impressive profitability, and promising growth prospects, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
