SiteOne Landscape Supply stock downgraded by William Blair on housing concerns

Investing.com - SiteOne Landscape Supply (NYSE:SITE) was downgraded from Outperform to Market Perform by William Blair on Wednesday. According to InvestingPro data, the stock is currently trading at a high earnings multiple with a P/E ratio of 45.56, while maintaining strong liquidity with a current ratio of 2.41.

The downgrade reflects concerns that persistent high interest rates and weak consumer confidence are delaying recovery in new residential construction and major landscaping renovations, which represent approximately 65% of SiteOne’s sales.

William Blair had previously anticipated that lower interest rates would improve housing fundamentals and unlock merger and acquisition opportunities in 2025, but noted this thesis "has proved incorrect."

The research firm expressed particular caution about the recent deceleration in the Sunbelt housing market, which is significant for SiteOne as its revenue is heavily tied to California, Florida, Texas, Georgia, and the Carolinas, with landscape spending typically lagging housing starts by six months.

Despite the near-term concerns, William Blair maintained a constructive long-term outlook on SiteOne’s leadership position, consolidation opportunities, and potential for EBITDA margin improvement to exceed 10%, indicating it would reassess its rating as demand trends improve. The company’s EBITDA currently stands at $356 million, with investors anticipating the next earnings report on October 29.

In other recent news, SiteOne Landscape Supply Inc. reported a modest increase in financial performance for the second quarter of 2025. The company’s net sales grew by 3%, reaching $1.46 billion. This growth occurred despite a challenging market environment. The company attributed its performance to strategic initiatives, including digital sales and private label growth. These developments reflect SiteOne’s efforts to navigate market softness effectively. Additionally, analysts have shown interest in the company’s strategies, although no specific upgrades or downgrades were mentioned. These recent developments highlight SiteOne’s ongoing efforts to strengthen its market position.

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