SiteOne Landscape Supply Inc (SITE, Financial) experienced a daily loss of -10.48% and a 3-month loss of -28.7%. Despite this, the company's Earnings Per Share (EPS) remains at 4.19. Is the stock significantly undervalued? Our valuation analysis aims to answer this question. Let's delve into the financials and performance of SiteOne Landscape Supply to uncover its true value.
Company Introduction
SiteOne Landscape Supply Inc is a prominent supplier of tools and equipment, serving a variety of businesses including wholesale irrigation, outdoor lighting, nursery, and landscape supplies. With a product portfolio that ranges from irrigation supplies to turf care equipment, the company has established a strong presence in the United States and Canada. As of November 01, 2023, the company's stock price stands at $123.33, while its GF Value, an estimation of fair value, is $199.33. This discrepancy paves the way for a deeper exploration of the company's true value.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value that the stock should ideally be traded at.
According to the GF Value, the stock of SiteOne Landscape Supply appears to be significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. SiteOne Landscape Supply has a cash-to-debt ratio of 0.08, which ranks worse than 81.82% of 143 companies in the Industrial Distribution industry. The overall financial strength of SiteOne Landscape Supply is 7 out of 10, indicating fair financial strength.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. SiteOne Landscape Supply has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $4.20 billion and Earnings Per Share (EPS) of $4.19. Its operating margin is 6.52%, which ranks better than 55.48% of 146 companies in the Industrial Distribution industry.
Growth is a critical factor in the valuation of a company. SiteOne Landscape Supply's 3-year average revenue growth rate is better than 79.43% of 141 companies in the Industrial Distribution industry. Its 3-year average EBITDA growth rate is 30.3%, which ranks better than 76.98% of 126 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another method of determining its profitability. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. For the past 12 months, SiteOne Landscape Supply's ROIC is 9.69, and its cost of capital is 13.84.
Conclusion
Overall, the stock of SiteOne Landscape Supply (SITE, Financial) appears to be significantly undervalued. The financial condition of the company is fair, and its profitability is strong. Its growth ranks better than 76.98% of 126 companies in the Industrial Distribution industry. To learn more about SiteOne Landscape Supply stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
