Critical Analysis: SiteOne Landscape Supply (NYSE:SITE) vs. Ferguson (NYSE:FERG)

Ferguson (NYSE:FERG) and SiteOne Landscape Supply (NYSE:SITE) are both industrials companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, earnings, analyst recommendations, risk and valuation.

Profitability

This table compares Ferguson and SiteOne Landscape Supply’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ferguson	6.82%	37.24%	12.31%
SiteOne Landscape Supply	3.41%	9.76%	4.83%

Insider & Institutional Ownership

82.0% of Ferguson shares are held by institutional investors. 0.2% of Ferguson shares are held by company insiders. Comparatively, 2.1% of SiteOne Landscape Supply shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Ferguson has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, SiteOne Landscape Supply has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Ferguson and SiteOne Landscape Supply, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferguson	0	6	10	2	2.78
SiteOne Landscape Supply	2	5	6	0	2.31

Ferguson presently has a consensus target price of $285.57, suggesting a potential upside of 28.24%. SiteOne Landscape Supply has a consensus target price of $132.80, suggesting a potential upside of 45.30%. Given SiteOne Landscape Supply’s higher probable upside, analysts clearly believe SiteOne Landscape Supply is more favorable than Ferguson.

Valuation & Earnings

This table compares Ferguson and SiteOne Landscape Supply”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferguson	$31.32 billion	1.38	$1.86 billion	$8.51	26.17
SiteOne Landscape Supply	$4.70 billion	0.85	$155.40 million	$3.65	25.04

Ferguson has higher revenue and earnings than SiteOne Landscape Supply. SiteOne Landscape Supply is trading at a lower price-to-earnings ratio than Ferguson, indicating that it is currently the more affordable of the two stocks.

Summary

Ferguson beats SiteOne Landscape Supply on 12 of the 15 factors compared between the two stocks.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.

About SiteOne Landscape Supply

SiteOne Landscape Supply, Inc., together with its subsidiaries, engages in the wholesale distribution of landscape supplies in the United States and Canada. The company provides irrigation products, including controllers, valves, sprinkler heads, irrigation pipes, micro irrigation, and drip products; fertilizer, grass seed, and ice melt products; control products, such as herbicides, fungicides, rodenticides, and other pesticides; landscape accessories that include mulches, soil amendments, drainage pipes, tools, and sods; nursery goods, which consist of deciduous and evergreen shrubs, ornamental, shade, evergreen trees, field grown and container-grown nursery stock, roses, perennials, annuals, bulbs, and plant species and cultivars; hardscapes, such as pavers, natural stones, blocks, and other durable materials; and outdoor lighting products that include lighting fixtures, LED lamps, wires, transformers, and accessories. It also offers consultative services consisting of assistance with irrigation project take-offs, commercial project planning, generation of sales leads, business operations, and product support services, as well as a series of technical and business management seminars; and distributes branded products of third parties. The company offers its products under the LESCO, SiteOne Green Tech, and Pro-Trade brand names. It markets its products primarily to residential and commercial landscape professionals who specializes in the design, installation, and maintenance of lawns, gardens, golf courses, and other outdoor spaces through branch network and direct distribution. SiteOne Landscape Supply, Inc. was incorporated in 2013 and is headquartered in Roswell, Georgia.