Yahoo Finance At US$152, Is The Scotts Miracle-Gro Company (NYSE:SMG) Worth Looking At Closely?
The Scotts Miracle-Gro Company (NYSE:SMG), is not the largest company out there, but it saw a decent share price growth in the teens level on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Scotts Miracle-Gro’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Scotts Miracle-Gro
What is Scotts Miracle-Gro worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.20% above my intrinsic value, which means if you buy Scotts Miracle-Gro today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $150.35, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Scotts Miracle-Gro’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Scotts Miracle-Gro generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 44% over the next couple of years, the future seems bright for Scotts Miracle-Gro. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SMG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on SMG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Scotts Miracle-Gro has 2 warning signs we think you should be aware of.
If you are no longer interested in Scotts Miracle-Gro, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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