Institutions Put A Bottom In SiteOne Landscape Supply
The insiders have been selling their shares of SiteOne Landscape Supply (NYSE: SITE) for the last year, but it doesn’t matter. The insider sales are small, regular, and related to share-based compensation so not a worry. The insiders still own more than 3.0% of the stock and, more importantly, the institutions are buying it.
Institutional activity over the past year has been vigorous and largely balanced between the bulls and the bears but the tide is changing. The YTD activity shows the bulls firmly in control of this market and their activity, more than 100 transactions in the first 6 weeks of the year, is putting a bottom in the stock. Regardless, the company is outperforming its expectations and is 98% owned by the institutions so we think it's going higher, much higher, than where it trades right now.
“We are entering 2022 with stronger teams, improved capabilities, and excellent momentum in our business,” said Doug Black, SiteOne’s Chairman and CEO in the Q4 earnings report. “Throughout the year, our terrific teams leveraged our strategic advantages in product supply and customer value to overcome the challenges in the supply chain, trucking, labor, and cost inflation to achieve good market share gains and tremendous financial results.”
SiteOne Is Growing More Than Landscapes
SiteOne Landscape Supply has been actively expanding its business via organic growth and acquisitions. The results, to say the least, are well worth the effort and produced revenue and margin growth as well. The Q4 results are in line with that trend, coming in at $805.2 million or up 19.3% and 820 basis points above the consensus despite there being 4 fewer days in the period. These sales are driven by a 21% increase in organic daily sales that are in turn aided by the acquisition of eight small businesses over the course of the year.
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Revenue gains are accompanied by margin expansion as well, with both the gross and operating margins rising more than 100 basis points over last year’s results. This helped drive strength on the bottom line with the $0.60 in GAAP EPS outpacing the consensus by $0.28. The company did not give specific guidance for revenue or earnings but did say it expected to see revenue up in the high-single digits and for adjusted EBITDA growth in the range of 3%.
The Analysts Are Holding SiteOne Landscape Supply
The analysts have been silent in regards to SiteOne Landscape Supply since late 2021 but they are still rating it a firm Hold. The consensus price target of the 8 ratings is $214 or about 15% above the current price action. The high price target of $275 is among the most recent and is set by Truist Finacial. Based on the Q4 results and outlook, we will not be surprised to see another round of price target increases and/or rating upgrades.
Turning to the chart, the stock is up in the wake of the Q4 report and looks like it is in reversal. The price action over the past few weeks has put in a double-bottom that only needs a break to new highs to confirm. Price action is meeting some resistance at the short-term moving average which could prevent that break out. Assuming price action is able to get above the moving average (possibly aided by institutional buying) we see it moving up to the $210 level at least, a move above there could take it to $250. If resistance overcomes the market, however, the stock could remain range-bound at these low levels or even fall to new lows.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| SiteOne Landscape Supply (SITE) | $135.63 | +2.0% | N/A | 43.89 | Hold | $156.44 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
