It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. For instance the SiteOne Landscape Supply, Inc. (NYSE:SITE) share price is 155% higher than it was three years ago. Most would be happy with that. Also pleasing for shareholders was the 18% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 12% in 90 days).
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
SiteOne Landscape Supply became profitable within the last three years. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that SiteOne Landscape Supply has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling SiteOne Landscape Supply stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Pleasingly, SiteOne Landscape Supply’s total shareholder return last year was 66%. That gain actually surpasses the 37% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting SiteOne Landscape Supply on your watchlist. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Be aware that SiteOne Landscape Supply is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant…
Of course SiteOne Landscape Supply may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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