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Scotts Miracle-Gro Up 10% in 3 Months: What's Driving it?

Zacks Equity Research

Shares of The Scotts Miracle-Gro Company SMG have gained 10.3% in the past three months. The stock has also outperformed the industry’s rise of 1.8% over the same time frame.

The company has a market cap of around $6.23 billion. Average volume of shares traded in the past three months was nearly 375.1K. The company also has long-term expected earnings per share (EPS) growth rate of 9.9%.

Let’s discuss the factors that are driving the stock.

Driving Factors

Upbeat fiscal 2020 view and healthy growth prospects of the Hawthorne business are contributing to the company’s share price appreciation.

For fiscal 2020, Scotts Miracle-Gro expects company-wide sales growth in the range of 4-6%. The company expects Hawthorne’s sales to grow 12-15% and U.S. Consumer sales to increase 1-3%. Moreover, adjusted EPS for fiscal 2020 are expected in the range $4.95-$5.15, which indicates a rise from $4.47 recorded in fiscal 2019.

Scotts Miracle-Gro is benefiting from the synergies of the Sunlight Supply acquisition. The buyout provides the company with modern and cost-efficient supply chain in the hydroponic industry. Also, net sales in the Hawthorne segment surged 95% in fiscal 2019 that was partly driven by the impact of the Sunlight Supply buyout. The acquisition is expected to continue driving Hawthorne’s sales in fiscal 2020.

Scotts Miracle-Gro is also poised to benefit from its new line of organic plant food and growing media products — Miracle-Gro Performance Organics. Performance Organics generated sales of nearly $40 million in fiscal 2019. Moreover, it led to a 6% rise in the consumer purchases of the company’s branded soils. The company expects the momentum to continue in fiscal 2020.

The Scotts Miracle-Gro Company Price and Consensus


The Scotts Miracle-Gro Company Price and Consensus

The Scotts Miracle-Gro Company price-consensus-chart | The Scotts Miracle-Gro Company Quote


Zacks Rank & Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Royal Gold, Inc RGLD and Commercial Metals Company CMC, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have surged 77.1% in the past year.

Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. Its shares have returned 37.7% in the past year.   

Commercial Metals has an expected earnings growth rate of 17.3% for fiscal 2020. The company’s shares have rallied 30.1% in the past year.

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