Scotts Miracle-Gro Company (SMG) AI Stock Analysis

• Market Cap: $3.70B
• Dividend Yield: 4.12%
• Average Volume (3M): 1.25M
• Price to Earnings (P/E): 127.9
• Beta (1Y): 1.06
• Revenue Growth: 0.75%
• EPS Growth: N/A
• Country: US
• Employees: 5,300
• Sector: Basic Materials
• Sector Strength: 68
• Industry: Agricultural Inputs
• EPS (TTM): 3.98
• Shares Outstanding: 57,715,023
• 10 Day Avg. Volume: 1,416,126
• 30 Day Avg. Volume: 1,253,829
• PEG Ratio: 0.03
• Price to Book (P/B): 16.06
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -9.78
• Enterprise Value/Market Cap: 1.42
• Enterprise Value/Revenue: 0.37
• Enterprise Value/Gross Profit: 5.45
• Enterprise Value/Ebitda: 5.68
• 1Y Price Target: $68.67
• Price Target Upside: 7.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 57 Neutral
• Price Target: $67.00 ▲(5.11%Upside)

Scotts Miracle-Gro's overall score reflects a mixed outlook. The most significant concerns are the financial challenges, including declining revenues and high debt. However, positive earnings call sentiment and technical momentum provide some optimism. Despite these factors, the high valuation remains a risk.

Positive Factors

Financial Performance

SMG's R&D investments in product innovation will render pricing a lever to utilize in generating sales growth medium-term.

Market Position

Scotts Miracle-Gro is seen as a strong consumer franchise with a significant market share of approximately 50% in the domestic market.

Operational Efficiency

Efforts are being made towards gross margin restoration.

Negative Factors

Earnings Quality

Earnings quality was mixed with sales below expectations.

Financial Leverage

Net leverage remains elevated, and tightening covenants are ahead.

Revenue Guidance

The updated U.S. consumer revenue guidance cadence is viewed negatively, likely underscoring channel inventory risk.

Scotts Miracle-Gro Company Business Overview & Revenue Model

Company Description

The Scotts Miracle-Gro Company engages in the manufacture, marketing, and sale of products for lawn, garden care, and indoor and hydroponic gardening in the United States and internationally. The company operates through three segments: U.S. Consumer, Hawthorne, and Other. It provides lawn care products comprising lawn fertilizers, grass seed products, spreaders, other durable products, and outdoor cleaners, as well as lawn-related weed, pest, and disease control products; gardening and landscape products include water-soluble and continuous-release plant foods, potting mixes and garden soils, mulch and decorative groundcover products, plant-related pest and disease control products, organic garden products, and lives goods and seeding solutions. The company also offers hydroponic products that help users to grow plants, flowers, and vegetables using little or no soil; lighting systems and components for use in hydroponic and indoor gardening applications; insect, rodent, and weed control products for home areas; and non-selective weed killer products. It sells its products under the Scotts, Turf Builder, EZ Seed, PatchMaster, Thick'R Lawn, GrubEx, EdgeGuard, Handy Green II, Miracle-Gro, LiquaFeed, Osmocote, Shake 'N Feed, Hyponex, Earthgro, SuperSoil, Fafard, Nature Scapes, Ortho, Miracle-Gro Performance Organics, Miracle-Gro Organic Choice, Whitney Farms, EcoScraps, Mother Earth, Botanicare, Hydroponics, Vermicrop, Gavita, Agrolux, Can-Filters, Sun System, Gro Pro, Hurricane, AeroGarden, Titan, Tomcat, Ortho Weed B Gon, Roundup, Groundclear, and Alchemist brands. The company serves home centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, e-commerce platforms, and food and drug stores, as well as indoor gardening and hydroponic distributors, retailers, and growers. The Scotts Miracle-Gro Company was founded in 1868 and is headquartered in Marysville, Ohio.

How the Company Makes Money

Scotts Miracle-Gro generates revenue primarily through the sale of its branded lawn and garden products to retailers, garden centers, and directly to consumers. The company's key revenue streams include sales of fertilizers, plant foods, grass seeds, and pest control products. In addition to its traditional lawn and garden segment, SMG has expanded into the indoor and hydroponic gardening market through its Hawthorne Gardening Company, which provides lighting, nutrients, and other equipment for indoor growers. Partnerships with major retailers like Home Depot, Lowe's, and Walmart significantly contribute to its earnings by providing widespread distribution channels. Furthermore, strategic acquisitions in the hydroponics sector have enhanced its product offerings and market reach, bolstering its overall revenue.

Scotts Miracle-Gro Company Financial Statement Overview

Summary

The financial performance indicates substantial challenges, with declining revenue, low profit margins, and financial instability due to negative equity. Although cash flow remains stable, the lack of growth and high debt levels pose significant risks.

Income Statement

The company's TTM (Trailing-Twelve-Months) income statement shows mixed results. Gross profit margin stands at 27.9%, indicating a reasonable level of profitability, but net profit margin is low at 1.0%, suggesting that most of the revenue is consumed by other expenses. Revenue has decreased over recent periods, with a decline of 2.8% from the previous annual report, highlighting a need for growth strategies. EBIT and EBITDA margins are relatively low, at 8.0% and 9.2% respectively, pointing to challenges in operational efficiency.

Balance Sheet

The balance sheet reflects financial instability, with a negative stockholders' equity of $290.1 million, indicating more liabilities than assets. The debt-to-equity ratio cannot be calculated due to negative equity, but total debt is high at $2.55 billion. Despite this, the company has managed to maintain operations, possibly leveraging its assets which total $3.54 billion. Return on equity cannot be assessed due to negative equity, while the equity ratio is negative, underlining financial risk.

Cash Flow

Cash flow statements show a positive operating cash flow of $449.3 million, indicating substantial cash generation from operations. Free cash flow is stable at $381.9 million, showing the company's ability to fund operations and capital expenditures. However, the free cash flow growth rate is negative when compared to previous period. The operating cash flow to net income ratio is strong, reflecting efficient cash conversion despite low net income.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
3.45B	3.55B	3.55B	3.92B	4.92B	4.13B
	Gross Profit
964.80M	850.50M	657.30M	982.60M	1.49B	1.35B
	EBIT
277.70M	208.80M	-174.40M	-434.00M	723.00M	585.20M
	EBITDA
318.90M	208.80M	-174.40M	-336.90M	845.80M	684.90M
	Net Income Common Stockholders
36.10M	-34.90M	-380.10M	-437.50M	512.50M	387.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.90M	71.60M	31.90M	86.80M	244.10M	16.60M
	Total Assets
3.54B	2.87B	3.41B	4.30B	4.80B	3.38B
	Total Debt
2.55B	2.52B	2.91B	3.27B	2.60B	1.68B
	Net Debt
2.53B	2.45B	2.87B	3.18B	2.35B	1.67B
	Total Liabilities
3.83B	3.26B	3.68B	4.15B	3.79B	2.68B
	Stockholders Equity
-290.10M	-390.60M	-267.30M	147.70M	1.01B	702.90M
Cash Flow		Free Cash Flow
381.90M	583.50M	438.20M	-242.50M	164.60M	495.30M
	Operating Cash Flow
449.30M	667.50M	531.00M	-129.00M	271.50M	558.00M
	Investing Cash Flow
-64.00M	-100.40M	-65.70M	-283.20M	-538.60M	46.90M
	Financing Cash Flow
-432.80M	-527.90M	-520.10M	255.30M	494.00M	-607.10M

Scotts Miracle-Gro Company Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 63.74
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMG, the sentiment is Positive. The current price of 63.74 is above the 20-day moving average (MA) of 61.47, above the 50-day MA of 56.26, and below the 200-day MA of 66.91, indicating a neutral trend. The MACD of 2.09 indicates Negative momentum. The RSI at 60.09 is Neutral, neither overbought nor oversold. The STOCH value of 64.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SMG.

Scotts Miracle-Gro Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CF	80 Outperform	$15.43B	12.56	26.14%	2.10%	0.66%	25.75%
ICL	73 Outperform	$8.61B	22.12	6.70%	2.59%	-3.48%	-18.34%
FMC	72 Outperform	$5.50B	16.90	8.81%	5.28%	1.45%	-70.85%
MOS	69 Neutral	$10.81B	29.41	3.09%	2.54%	-13.37%	-50.63%
RKDA	58 Neutral	$6.84M	―	-7.89%	―	-2.81%	72.03%
SMG	57 Neutral	$3.70B	127.88	4.98%	4.12%	0.75%	―
Sector *	51 Neutral	$2.04B	-1.21	-21.10%	3.95%	2.90%	-30.45%

Scotts Miracle-Gro Company Corporate Events

Scotts Miracle-Gro Announces Board Changes and Shareholder Decisions

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.