SiteOne Landscape Should Benefit From A Housing Recovery, But Positives May Already Be Priced In

Eisner cited recovery from the broader U.S. housing market, "aided by outgrowth from share gains and industry consolidation," as a positive macro outlook for SiteOne. "Based on this, we see SITE's return structure as strong, even compared to other distributors," stated Eisner.

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Core drivers of growth within the company included an expanded product offering and margin expansion. "We estimate [...] margin expansion though 2018 (to 9.6 percent) as SITE rationalizes its cost structure, optimizes the supply chain and prices non-sensitive items," said Eisner.

The Goldman analyst believed, however, that much of the "strong return profile" was already priced in. "In our view, Site's 2017E ROA of 9.1 percent is 1.10 percent above the distributor comp set average of 8 percent, though we think this is priced in at 9.5x EV/EBITDA," stated the analyst.

Minutes after Monday's opening bell, SiteOne Landscape was up 3.14 percent at $28.89.