The Scotts Miracle-Gro Company (SMG - Free Report) recorded net income from continuing operations of $125.5 million or $2.23 per share in third-quarter fiscal 2018 (ended Jun 30, 2018), down from $144.6 million or $2.41 a year ago.
Barring one-time items, adjusted earnings came in at $2.67 per share in the quarter, which surpassed the Zacks Consensus Estimate of $2.55.
Sales rose roughly 2% year over year to $994.6 million. However, the figure trailed the Zacks Consensus Estimate of $996.4 million.
Company-wide adjusted gross margin rate declined to 36.1% from 39.4% a year ago, mainly due to commodity inflation, higher-than-expected distribution costs, product mix related to acquisitions and increased trade program expenses.
Segment Review
In the fiscal third quarter, sales from the U.S. Consumer division rose roughly 1% year over year to $810.9 million, while profitability decreased 1% to $243.1 million.
Sales from the Hawthorne segment were up around 2% to $74.2 million in the quarter. The segment incurred net loss of $3.6 million against net profit of $10.3 million a year ago. Notably, Hawthorne sales declined 37% in the quarter, excluding the contributions from acquisitions.
Sales from the company’s Other segment rose 10% to $109.5 million while profitability increased 2% to $13.1 million.
Balance Sheet
Scotts Miracle-Gro ended the quarter with cash and cash equivalents of $29.6 million, down around 66.3% year over year. Long-term debt was $1,975.4 million, up roughly 40%.
Outlook
The company reiterated its prior guidance for fiscal 2018. It continues to expect sales growth in the range of 0-2% year over year, which includes impact of acquisitions. Adjusted earnings per share are anticipated to be in the $3.70-$3.90 band.
Price Performance
Shares of Scotts Miracle-Gro have declined 3.3% over the past three months against the industry’s 14% rise.
Zacks Rank & Stocks to Consider
Scotts Miracle-Gro currently has a Zacks Rank #5 (Strong Sell).
A few better-ranked stocks in the basic materials space are KMG Chemicals, Inc , CF Industries Holdings, Inc. (CF - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 40.2% in a year.
CF Industries has an expected long-term earnings growth rate of 6%. Its shares have rallied 53.7% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 17.3% in a year.
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The Scotts Miracle-Gro Company (SMG - Free Report) recorded net income from continuing operations of $125.5 million or $2.23 per share in third-quarter fiscal 2018 (ended Jun 30, 2018), down from $144.6 million or $2.41 a year ago.
Barring one-time items, adjusted earnings came in at $2.67 per share in the quarter, which surpassed the Zacks Consensus Estimate of $2.55.
Sales rose roughly 2% year over year to $994.6 million. However, the figure trailed the Zacks Consensus Estimate of $996.4 million.
Company-wide adjusted gross margin rate declined to 36.1% from 39.4% a year ago, mainly due to commodity inflation, higher-than-expected distribution costs, product mix related to acquisitions and increased trade program expenses.
Segment Review
In the fiscal third quarter, sales from the U.S. Consumer division rose roughly 1% year over year to $810.9 million, while profitability decreased 1% to $243.1 million.
Sales from the Hawthorne segment were up around 2% to $74.2 million in the quarter. The segment incurred net loss of $3.6 million against net profit of $10.3 million a year ago. Notably, Hawthorne sales declined 37% in the quarter, excluding the contributions from acquisitions.
Sales from the company’s Other segment rose 10% to $109.5 million while profitability increased 2% to $13.1 million.
Balance Sheet
Scotts Miracle-Gro ended the quarter with cash and cash equivalents of $29.6 million, down around 66.3% year over year. Long-term debt was $1,975.4 million, up roughly 40%.
Outlook
The company reiterated its prior guidance for fiscal 2018. It continues to expect sales growth in the range of 0-2% year over year, which includes impact of acquisitions. Adjusted earnings per share are anticipated to be in the $3.70-$3.90 band.
Price Performance
Shares of Scotts Miracle-Gro have declined 3.3% over the past three months against the industry’s 14% rise.
Zacks Rank & Stocks to Consider
Scotts Miracle-Gro currently has a Zacks Rank #5 (Strong Sell).
A few better-ranked stocks in the basic materials space are KMG Chemicals, Inc , CF Industries Holdings, Inc. (CF - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 40.2% in a year.
CF Industries has an expected long-term earnings growth rate of 6%. Its shares have rallied 53.7% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 17.3% in a year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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