• Wondering if SiteOne Landscape Supply at around US$106.50 is starting to look interesting or still feels expensive for your portfolio? This article focuses squarely on what you are getting for the price you pay.
• The stock has been under pressure lately, with the share price down about 6.1% over the past week, 15.2% over the past month, 14.8% year to date, and 6.7% over the past year. These moves may change how you think about its risk and return trade off.
• Over the past few years, the stock has also declined about 25.4% over three years and 35.3% over five years. This keeps it on the radar for investors reassessing expectations. These longer term returns frame the question of whether the current price better reflects the business or if the market is still mispricing the stock.
• Right now SiteOne Landscape Supply has a value score of 2 out of 6. Next you will see how different valuation approaches judge that price, and then finish with a way to look beyond the headline metrics to understand the valuation story in more depth.

SiteOne Landscape Supply scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: SiteOne Landscape Supply Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today using a required rate of return. The goal is to work out what those future cash flows are worth in today’s dollars.

For SiteOne Landscape Supply, the model uses Free Cash Flow to Equity and a 2 stage framework. The latest twelve month free cash flow stands at about $254 million. Analysts provide explicit estimates up to 2028, with Simply Wall St extrapolating further out. Within these projections, free cash flow is expected to be about $295 million by 2028, and the extended 10 year path ranges from $213.45 million in 2026 to around $411.82 million by 2035, all expressed in dollars and then discounted back.

When all those discounted cash flows are added up, the model produces an estimated intrinsic value of about $127.31 per share. Compared with the recent share price of around $106.50, this implies the stock screens as roughly 16.3% undervalued under this DCF approach.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests SiteOne Landscape Supply is undervalued by 16.3%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Approach 2: SiteOne Landscape Supply Price vs Earnings

For profitable companies, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. This makes it a straightforward check on whether the stock price looks stretched or reasonable relative to profits.

What counts as a “normal” P/E depends on how the market views a company’s growth potential and risk profile. Higher growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually points to a lower multiple.

SiteOne Landscape Supply currently trades on a P/E of about 30.9x. That sits above the Trade Distributors industry average P/E of roughly 24.9x and above the peer average of about 21.0x. Simply Wall St also calculates a proprietary “Fair Ratio” of 28.9x for SiteOne Landscape Supply. This Fair Ratio is designed to be more tailored than a simple peer or industry comparison because it incorporates factors such as earnings growth, profit margins, industry characteristics, market cap and company specific risks.

Comparing the current P/E of 30.9x with the Fair Ratio of 28.9x suggests the stock is trading somewhat richer than that model implies.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your SiteOne Landscape Supply Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives on Simply Wall St’s Community page let you attach a clear story about SiteOne Landscape Supply to your own revenue, earnings and margin expectations, link that story to a Fair Value, compare it with the current price to help inform your decision, and then keep that view updated automatically when new news or earnings arrive. For example, one investor might build a bullish Narrative around a Fair Value of US$200.00 using assumptions similar to the highest analyst target, while another might anchor a more cautious Narrative closer to US$140.00 in line with the lowest cohort. Both viewpoints can then sit side by side for you to compare and decide which story you find more convincing.

Do you think there's more to the story for SiteOne Landscape Supply? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.