Skip to main content

Market Overview

William Blair: SiteOne Landscape Supply Could Have Robust 2018 With M&A, Margin Expansion

William Blair: SiteOne Landscape Supply Could Have Robust 2018 With M&A, Margin Expansion

SiteOne Landscape Supply Inc (NYSE: SITE) is poised to benefit from a combination of factors, including healthy landscape demand, growing M&A appetite and margin inflection in 2018, an analyst at William Blair said.

The Analyst

William Blair analyst Ryan Merkel upgraded shares of SiteOne Landscape from Market Perform to Outperform.

The Thesis

2018 could be a robust year for M&A and margin expansion, Merkel said in a Friday note. (See the analyst's track record here.) 

The possibility exists for SiteOne to execute a few larger M&A deals, the analyst said. Helped by improved pricing, SG&A leverage, category management and supply chain, the company's EBIDTA margin could expand over 100 basis points in 2018, Merkel said.

The demand outlook remains supportive due to rising new housing starts, strength in home improvement and mid-single-digit commercial construction growth, the analyst said. 

Over the long term, the analyst said he sees the potential for gross margins to expand by 200-300 basis points and EBITDA margins to rise by 300-400 basis points.

William Blair raised its 2018 EBITDA estimate to $206 million and 2019 EBITDA estimate to $265 million.

"We had been waiting for a pullback to get more aggressive, but we believe the greater risk is the stock continues to run," Merkel said. "In our view, SiteOne's dominance in a niche market, significant white space to expand share, moat against internet competition and reliable management command a premium valuation."

Based on a bull case EBITDA assumption of $355 million in 2020 at 13 times valuation, the firm sees 34 percent upside from current levels to $100.

The Price Action

SiteOne Landscape shares have nearly doubled over the past year.

Related Links:

Lowe's Continues To Trail Home Depot But Is Now A Buy, Analyst Says

Lowe's Hiring Spree Begins As It Gears Up For Spring

Latest Ratings for SITE

Feb 2021Truist SecuritiesMaintainsHold
Feb 2021BarclaysMaintainsEqual-Weight
Sep 2020BairdUpgradesNeutralOutperform

View More Analyst Ratings for SITE
View the Latest Analyst Ratings


Related Articles (SITE)

View Comments and Join the Discussion!

Posted-In: construction landscaping William BlairAnalyst Color Upgrades Analyst Ratings Best of Benzinga

Latest Ratings

ENTGUBSInitiates Coverage On120.0
RBAOTR GlobalDowngrades
TTDVertical ResearchUpgrades
DCredit SuisseMaintains90.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at