SiteOne (SITE)

Agriculture products company SiteOne Landscape Supply (NYSE:SITE) met Wall Streets revenue expectations in Q3 CY2025, with sales up 4.1% year on year to $1.26 billion. Its GAAP profit of $1.31 per share was 6% above analysts’ consensus estimates.

Company Overview

Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE:SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.

Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.

Competitors in the landscape and industrial products industry include Ferguson (NYSE:FERG), Fastenal (NASDAQ:FAST), and Lowe's (NYSE:LOW).

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, SiteOne grew its sales at an excellent 12.7% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. SiteOne’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.1% over the last two years was well below its five-year trend.

SiteOne also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, SiteOne’s organic revenue was flat. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, SiteOne grew its revenue by 4.1% year on year, and its $1.26 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.9% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its products and services will see some demand headwinds.

SiteOne’s gross margin is good compared to other industrials businesses and signals it sells differentiated products, not commodities. As you can see below, it averaged an impressive 34.8% gross margin over the last five years. Said differently, SiteOne paid its suppliers $65.23 for every $100 in revenue.

In Q3, SiteOne produced a 34.7% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

SiteOne was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.

Analyzing the trend in its profitability, SiteOne’s operating margin decreased by 4.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. SiteOne’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, SiteOne generated an operating margin profit margin of 6.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

SiteOne’s EPS grew at a weak 3.8% compounded annual growth rate over the last five years, lower than its 12.7% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into SiteOne’s earnings to better understand the drivers of its performance. As we mentioned earlier, SiteOne’s operating margin was flat this quarter but declined by 4.3 percentage points over the last five years. Its share count also grew by 1.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For SiteOne, its two-year annual EPS declines of 10.5% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, SiteOne reported EPS of $1.31, up from $0.97 in the same quarter last year. This print beat analysts’ estimates by 6%. Over the next 12 months, Wall Street expects SiteOne’s full-year EPS of $3.08 to grow 30.9%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

SiteOne has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.9%, subpar for an industrials business.

SiteOne’s free cash flow clocked in at $118.5 million in Q3, equivalent to a 9.4% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although SiteOne hasn’t been the highest-quality company lately because of its poor bottom-line (EPS) performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 13%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, SiteOne’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

SiteOne reported $106.9 million of cash and $955.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $408.4 million of EBITDA over the last 12 months, we view SiteOne’s 2.1× net-debt-to-EBITDA ratio as safe. We also see its $15.3 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing SiteOne beat analysts’ organic revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed. Overall, this print was mixed. The stock remained flat at $123.99 immediately following the results.

Updated: December 4, 2025 at 10:05 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

SiteOne’s business quality ultimately falls short of our standards. Although its revenue growth was impressive over the last five years, it’s expected to deteriorate over the next 12 months and its diminishing returns show management's prior bets haven't worked out. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its flat organic revenue disappointed.

SiteOne’s P/E ratio based on the next 12 months is 30.5x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $153.56 on the company (compared to the current share price of $130.25).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.