Initiated 2026-09-27 · Price $91.31 (as of 2026-09-25 close, stockanalysis.com) · Mkt cap $3.99bn · Industrials / trading companies and distributors (landscape supply) · Model: verified

Rating: Hold — Conviction: Low

SiteOne is the only national player in a fragmented market, and it is improving gross margin through price, private brands and small-customer growth. But volumes are falling in new residential and in repair and upgrade, and FY2026 organic sales are guided flat to +1%. After a 30% fall over the year, the stock trades at ~12x trailing EBITDA. That sits between the base and bull cases: the exit method is modestly above today's price and the Gordon method below it. Conviction is Low because the answer depends almost entirely on when housing turns.

Model value range vs price
Bear $41.45Base $84.30Bull $128.38Price $91.31

Business overview

SiteOne distributes irrigation, agronomics (fertilizer, seed, chemicals), hardscapes, nursery goods, outdoor lighting and landscape equipment through a national branch network. It sells mainly to landscape contractors. By end market, maintenance is ~36% of sales, repair and upgrade ~30%, new residential ~20% and new commercial ~14% (Q2 2026 call). Q2 2026 sales rose 5% to $1,530.7mm. Organic daily sales rose 1%: price added 3% and volume fell about 2%. Gross margin rose 50bp to 36.9%, while SG&A rose 30bp to 24.2% of sales. Earnings depend on contractor volume in residential and repair and upgrade, gross margin (price, commodity deflation, private-brand mix), and branch cost leverage. Growth also comes from acquisitions (two deals with ~$110mm of annual sales announced in 2026); the model deliberately leaves these out.

Competition

According to SiteOne's FY2024 10-K, regional and local competitors hold ~82% of the landscape supply industry by 2024 sales. That implies SiteOne holds ~18%, the latest share figure retrieved (roughly 18 months old). The named rivals that matter are Heritage Landscape Supply (part of Home Depot through SRS), Horizon Distributors (part of Pool Corp), Ewing and Harrell's. Heritage has the balance sheet to compete on price and to bid for the same acquisition targets. Current pricing evidence is mixed. Overall price was +3% in Q2, but grass seed fell 9% and PVC pipe 4%, so commodity categories would show pressure first, followed by acquisition multiples. The closest listed comparables trade at 11–12x TTM EV/EBITDA (stockanalysis, 2026-09-25): Core & Main at 11.3x and Pool at 11.9x. Ferguson trades at 16.1x and Watsco at 17.6x. The thesis rests on no tariff regime. PVC and fertilizer prices are the relevant input costs, and they pass through with a lag.

Bull case

  1. Housing and repair and upgrade turn. New residential is down high single digits and repair and upgrade mid-single digits in 2026, so a recovery levers volume through a fixed branch base. Plays out if mortgage rates fall and existing-home turnover recovers in 2027. Model: rev_growth, exit_ev_ebitda
  2. Margin initiatives compound. Pro-Trade private-brand sales are up nearly 50%, siteone.com sales are up >50% year to date, and branch consolidations have kept >80% of transferred sales. Together these lift EBITDA margin back toward FY2021 levels. Plays out if gross margin holds ≥36% while SG&A leverages. Model: ebitda_margin
  3. Consolidating an 82%-fragmented market. Acquisitions at sensible multiples keep adding revenue and density. Model: not in the value range — acquisition spend and acquired revenue are excluded from the drivers

Bear case

  1. Residential stays weak. Q2 volume fell ~2%, weakest in the Sun Belt, and the Q2 miss prompted a downgrade and a cut to the organic sales guide. Plays out if the 10Y stays above 5% and starts keep falling into 2027. Model: rev_growth, wacc
  2. Branch deleverage and commodity deflation. Healthcare and fuel costs pushed SG&A up 30bp even with positive sales, and seed and PVC prices are falling. Plays out if volume keeps falling while commodity prices deflate. Model: ebitda_margin
  3. Distributor de-rating. A housing-linked distributor with a negative volume trend trades below Core & Main. Model: exit_ev_ebitda

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
EV/EBITDA, aggregator (TTM, lease-inclusive) 13.0x n/a (unverified) CNM 11.3x · POOL 11.9x · FERG 16.1x · WSO 17.6x stockanalysis.com, 2026-09-25
EV/EBITDA, model basis (EV $4.61bn, operating leases excluded) 12.3x FY2025 · 11.9x TTM · ~10.5x FY2026 adj. guide midpoint (before SBC) n/a n/a (peers not restated) model-inputs.json
Forward P/E (stockanalysis consensus) 19.3x n/a (unverified) CNM 13.4x · POOL 14.5x · FERG 18.9x · WSO 25.6x stockanalysis.com, 2026-09-25
FCF yield (TTM) 6.5% (FCF $259.3mm, before $99mm of acquisitions) FCF $178–265mm FY2021–FY2025 n/a stockanalysis.com, 2026-09-25

Model-implied value range (from model-summary.json; generic module, Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $41.45 · Base $84.30 · Bull $128.38 per share, i.e. implied returns of −54.6% / −7.7% / +40.6% vs $91.31. These ranges show how the bull and bear drivers translate into value; they are not price targets. The price sits just above the base case and well below the bull, so the market prices a slow recovery rather than a rebound or a downturn.

Re-rating. The base exit of 12x is a 0.8% re-rating on 11.9x TTM and a 2.4% de-rating on 12.3x FY2025, so it is essentially flat. The exit method gives $98.94 (+8.4%). The Gordon method gives $69.66, 30% lower, because a 10.9% WACC with 3% terminal growth embeds a lower terminal multiple. That gap, not a view of deterioration, is why the base midpoint sits below the price, so the negative base return doesn't make this a Sell.

Tail. No customer or product is ≥50% of sales, and the bear case is a break rather than a plateau, so no concentration run was required. A downturn sensitivity was run on a scratch copy anyway. Revenue +3% / −10% / −3% / +2% / +3%, EBITDA margin falling to 6–6.5%, NWC 21% of revenue, an 8x exit and a 12.5% WACC give $27.29 (−70.1%).

Balance sheet: net leverage 1.5x FY2025 EBITDA (model Credit; the company reports 1.3x TTM adjusted EBITDA), coverage 10.1x, liquidity ~$530mm ($87.4mm cash plus $443mm of ABL capacity). Funded debt is a $505.7mm term loan plus $137.3mm of finance leases; the ABL was undrawn and runs to April 2031. The term loan's maturity (2030 in the model) and the ratings are n/a (unverified).

Model note:

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − Market de-rating of housing-linked distributors; demand unaffected Low −$7.25
S2 Slow bear / recession − Residential, repair and upgrade, and commercial fall together, and branch costs deleverage. About half of Base − Bear ($42.85) because maintenance (~36% of sales) cushions a transitory recession, whereas the bear case is a permanent margin reset High −$20.70
S3 Rapid rate shock − Mortgage rates hit new residential (20%) and home-equity-funded repair and upgrade (30%) High −$14.49
S4 Slow rate grind − Same channel, grinding Med −$10.26
S5 Soft-landing cuts + Lower rates revive residential and repair and upgrade; volume levers High +$17.60
S6 Recession-driven cuts − Construction volume falls faster than lower rates help Med −$11.80
S7a Credit liquidity shock − Forced selling; 1.3x leverage and an ABL to 2031 limit funding risk Low −$4.35
S7b Slow default cycle − Small contractor customers lose credit; floating term-loan cost rises Low −$7.11
S8 Stagflation − Fuel and healthcare costs lift SG&A ahead of price while demand slows Med −$10.87
S9a Dollar spike − Small Canadian business translates lower Low −$0.23
S9b Dollar slide + Mirror of S9a Low +$0.23
S10 Melt-up + Cyclicals re-rate Low +$5.80
S11 Energy supply shock − Delivery-fleet fuel and fertilizer costs spike; price follows with a lag. Small because the model applies it for one year Low −$0.37
S12 Mega-cap/AI derating 0 No material effect, not modeled; housing- and maintenance-driven — $0.00

Currently active/on watch per the playbook: state.md lists S3 as partially active; the macro log records all three legs crossed from 2026-09-24 (10Y 5.17% on 2026-09-25). S8, S10 and S11 are on watch. S3 is High here, S8 Med, and S10 and S11 Low.

Model value change vs Base, by scenario
S2 Slow bear / recession−$20.70S3 Rapid rate shock−$14.49S6 Recession-driven cuts−$11.80S8 Stagflation−$10.87S4 Slow rate grind−$10.26S1 Fast equity crash−$7.25S7b Slow default cycle−$7.11S7a Credit liquidity shock−$4.35S11 Energy supply shock−$0.37S9a Dollar spike−$0.23S12 Mega-cap/AI derating$0.00S9b Dollar slide+$0.23S10 Melt-up+$5.80S5 Soft-landing cuts+$17.60

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