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Scotts Miracle-Gro (SMG)
:SMG
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Scotts Miracle-Gro Company
(NYSE:SMG)46Neutral
Positive Factors
Earnings
SMG shares are considered undervalued, reflecting a robust near-term earnings recovery and a strong long-term growth profile.
Valuation
The current valuation offers an attractive risk/reward, considering a potential poor season without denying the earnings recovery outlook.
Negative Factors
Cannabis Market Conditions
There is concern that business conditions in the cannabis markets are difficult, affecting the potential value of the Hawthorne division.
Weather Impact
Commentary points to a weak start due to adverse winter weather, creating a headwind for lawn and garden performance.
Scotts Miracle-Gro Company (SMG) vs. S&P 500 (SPY)
Market Cap
$3.45B
Dividend Yield4.72%
Average Volume (3M)926.68K
Price to Earnings (P/E)―
Beta (1Y)1.32
Revenue Growth3.61%
EPS Growth94.27%
CountryUS
Employees5,300
SectorBasic Materials
Sector Strength56
IndustryAgriculture
Share Statistics
EPS (TTM)-0.48
Shares Outstanding57,472,700
10 Day Avg. Volume1,104,720
30 Day Avg. Volume926,681
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.90
Price to Cash Flow (P/CF)-1.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$75.80Price Target Upside26.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Scotts Miracle-Gro Company Business Overview & Revenue Model
Company DescriptionThe Scotts Miracle-Gro Company (SMG) is a leading provider in the lawn and garden care industry, primarily serving the consumer market in North America. The company operates through three main segments: U.S. Consumer, Hawthorne, and Other. It offers a wide range of products including lawn fertilizers, grass seed products, spreaders, outdoor cleaners, and pest and weed control solutions. Scotts Miracle-Gro is renowned for its well-established brands such as Scotts, Miracle-Gro, and Ortho, and also engages in the hydroponic products market through its Hawthorne Gardening subsidiary, which focuses on indoor and urban gardening solutions.
How the Company Makes MoneyScotts Miracle-Gro generates revenue through the sale of its lawn and garden care products primarily to retail customers including home improvement centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, and food and drug stores. The U.S. Consumer segment is its largest revenue stream, driven by the sale of fertilizers, grass seeds, and pest control products. The Hawthorne segment contributes to its revenue by offering hydroponic products and solutions to the indoor and urban gardening markets, catering to both hobbyists and commercial growers. The company also benefits from strategic partnerships and licensing agreements that enhance its product offerings and market reach. Seasonal demand, brand strength, and innovation in product development significantly impact its earnings.
Scotts Miracle-Gro Company Financial Statement Overview
Summary
The company faces financial challenges with declining revenue and profitability issues, as indicated by negative net income margins. A negative stockholders' equity and high debt levels raise concerns about financial stability and leverage risks. Despite strong operating cash flow, declining free cash flow suggests potential cash management issues. Some operational improvements are noted, but strategic financial adjustments are needed.Income Statement
The company experienced a decline in revenue from the previous year, alongside negative net income margins, indicating profitability challenges. However, there is a slight improvement in gross profit and EBIT margins in the TTM, suggesting some operational enhancement.45
Neutral
Balance Sheet
The balance sheet reveals a negative stockholders' equity and high debt levels, indicating potential financial instability and leverage risks. The equity ratio is negative, suggesting that liabilities exceed assets.30
Negative
Cash Flow
The company shows a strong operating cash flow, which is significantly higher than net income, reflecting good cash-generating ability. However, the decline in free cash flow compared to previous periods suggests potential cash management issues.60
Neutral
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.74B | 3.55B | 3.55B | 3.92B | 4.92B | 4.13B | Gross Profit |
| 1.22B | 850.50M | 657.30M | 872.90M | 1.47B | 1.35B | EBIT |
| 521.60M | 208.80M | -174.40M | 253.10M | 723.00M | 585.20M | EBITDA |
| 617.20M | 215.80M | -174.40M | -336.90M | 845.80M | 697.60M | Net Income Common Stockholders |
| 325.70M | -34.90M | -380.10M | -437.50M | 512.50M | 387.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 71.60M | 71.60M | 31.90M | 86.80M | 244.10M | 16.60M | Total Assets |
| 2.87B | 2.87B | 3.41B | 4.30B | 4.80B | 3.38B | Total Debt |
| 2.23B | 2.23B | 2.61B | 2.97B | 2.29B | 1.52B | Net Debt |
| 2.16B | 2.16B | 2.58B | 2.88B | 2.05B | 1.50B | Total Liabilities |
| 3.26B | 3.26B | 3.68B | 4.15B | 3.79B | 2.68B | Stockholders Equity |
| -390.60M | -390.60M | -267.30M | 147.70M | 1.01B | 702.90M |
| Cash Flow | Free Cash Flow | ||||
| 291.70M | 583.50M | 438.20M | -242.50M | 164.60M | 495.30M | Operating Cash Flow |
| 347.00M | 667.50M | 531.00M | -129.00M | 271.50M | 558.00M | Investing Cash Flow |
| 66.10M | -100.40M | -65.70M | -283.20M | -538.60M | 46.90M | Financing Cash Flow |
| -401.00M | -527.90M | -520.10M | 255.30M | 494.00M | -607.10M |
Scotts Miracle-Gro Company Technical Analysis
Negative
59.98
Price Trends
66.43
Negative
72.85
Negative
70.48
Negative
Market Momentum
-2.85
Positive
38.99
Neutral
20.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMG, the sentiment is Negative. The current price of 59.98 is below the 20-day moving average (MA) of 63.29, below the 50-day MA of 66.43, and below the 200-day MA of 70.48, indicating a bearish trend. The MACD of -2.85 indicates Positive momentum. The RSI at 38.99 is Neutral, neither overbought nor oversold. The STOCH value of 20.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SMG.
Scotts Miracle-Gro Company Risk Analysis
Scotts Miracle-Gro Company disclosed 41 risk factors in its most recent earnings report. Scotts Miracle-Gro Company reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Scotts Miracle-Gro Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $7.78B | 19.11 | 6.88% | 3.30% | -12.11% | -55.68% | |
73 Outperform | $13.74B | 12.02 | 24.43% | 2.56% | -10.48% | -13.78% | |
63 Neutral | $4.57B | 13.50 | -0.06% | 6.53% | -5.36% | -74.25% | |
63 Neutral | $7.33B | 42.32 | 1.52% | 3.60% | -18.79% | -84.24% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% | |
46 Neutral | $3.45B | ― | 4.98% | 4.72% | 3.61% | 94.27% | |
43 Neutral | $433.30M | ― | 0.00% | 5.98% | -7.25% | -2202.65% |
* Basic Materials Sector Average
Performance Comparison
SMG
Scotts Miracle-Gro Company
59.98
-1.59
-2.58%
CF
Cf Industries Holdings
75.28
-2.28
-2.94%
CMP
Compass Minerals International
9.73
-11.24
-53.60%
FMC
FMC
36.60
-20.74
-36.17%
MOS
Mosaic Co
23.08
-7.25
-23.90%
ICL
Icl
5.78
0.70
13.78%
Scotts Miracle-Gro Company Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -19.96% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a strong start to fiscal 2025 with significant improvements in gross margin and cost savings. However, challenges remain, particularly with the Hawthorne segment and restructuring costs. The sentiment leans towards cautious optimism given the strong consumer segment performance and supply chain efficiencies.Highlights
Strong First Quarter Performance
Sales on a company-wide basis were $417 million, up from $410 million. U.S. consumer volume gains increased 11% to $341 million from $307 million.
Gross Margin Improvement
Achieved over 750 basis points of improvement in GAAP and non-GAAP adjusted gross margin rates. The GAAP rate was 22.7% versus 15.2% in prior year.
Supply Chain Cost Savings
On track to achieve $75 million of cost savings in fiscal '25 as part of a $150 million 3-year target.
Successful Retailer Programs
The company noted a nearly 10% POS lift last year, outperforming the category by 3x.
Hawthorne Profitability
While Hawthorne sales declined, its profitability improved significantly, contributing approximately $20 million of EBITDA for the full year.
Lowlights
Hawthorne Sales Decline
Hawthorne sales declined 35% to $52 million compared to $80 million last year due to a strategic shift to exit low-margin third-party distribution.
Restructuring and Nonrecurring Costs
The quarter included $21.7 million in impairment, restructuring, and other nonrecurring items.
GAAP Net Loss
First quarter GAAP net loss was $69.5 million or $1.21 per share, compared with the prior year loss of $80.5 million or $1.42 per share.
Company Guidance
During the Scotts Miracle-Gro First Quarter Earnings Conference Call, detailed guidance was provided, emphasizing strong fiscal year 2025 performance metrics. The company anticipates sustained sales growth of at least 3% annually, driven by higher-margin products and innovation across all consumer business channels. They aim to be the lowest cost manufacturer of high-performance products, targeting gross margin improvement up to 35% with mid- to high single-digit EBITDA growth. Additionally, they plan to generate strong free cash flow to facilitate shareholder-friendly actions, such as reducing share count and potentially issuing special dividends. The company also highlighted the importance of their consumer franchise, with a focus on expanding their demographic reach and increasing investments in advertising, which will account for nearly 20% of sales. They reported a 12% increase in POS and a significant improvement in gross margin, with a target of achieving a 30% gross margin for the full year. The call underscored the importance of strategic initiatives to streamline operations, enhance supply chain efficiencies, and explore opportunities in the burgeoning online market, all aimed at delivering consistent financial growth through fiscal 2027.Scotts Miracle-Gro Company Corporate Events
Executive/Board ChangesShareholder Meetings
Scotts Miracle-Gro Announces Board Changes and Shareholder Decisions
Neutral
Jan 31, 2025
On January 27, 2025, Tom Kelly resigned from The Scotts Miracle-Gro Company’s Board of Directors, effective January 31, after nearly 20 years of service, without any disagreements with the company. Subsequently, on January 31, 2025, Nick Miaritis, a chief client officer at VaynerMedia, was appointed to the Board, enhancing the company’s focus on expanding its consumer marketing capabilities. The company’s shareholders, at the annual meeting, elected new directors, approved executive compensation, ratified Deloitte & Touche LLP as the independent auditor, and amended the stock purchase plan.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.