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It is officially summer and that means you are spending a little more time on your lawn and your flowers... or are you?  A recent miss by Scotts Miracle-Gro (SMG - Free Report) makes me feel like the wetter than normal spring meant a slow start to planting season.  Let's take a look at the recent quarter and what the expectations have adjusted to.  When there is a miss like this, the negative revision to earnings estimates is the majority of the reason this stock slipped to a Zacks Rank #5 (Strong Sell) and is the Bear of the Day today.

Recent Miss

On May 2, the company posted earnings per share of $2.78, but that was $0.15 below the Zacks Consensus Estimate of $2.93.  That translates to a 5.1% negative earnings surprise.

Description

The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company LLC, is the world's largest marketer of branded consumer products for lawn and garden care, with products for professional horticulture as well. The Company's brands are the most recognized in the industry. In the U.S., the Company's Scotts, Miracle-Gro, Ortho and Smith & Hawken brands are market-leading in their categories, as is the consumer Roundup brand, which is marketed in North America and most of Europe exclusively by Scotts and owned by Monsanto. In the U.S. the Company operates Scotts LawnService0, the second largest residential lawn care service business. In Europe, the Company's brands include Weedol, Pathclear, Evergreen, Levington, Miracle-Gro, KB, Fertiligene and Substral. Its customers include home improvement centers, mass merchandisers, warehouse clubs, hardware chains, independent hardware stores, nurseries, food and drug stores, commercial nurseries and greenhouses, and specialty crop growers.

Earnings

The last four earnings reports have hit or miss, with the company beating the Zacks Consensus Estimate two times and missing the mark two times as well.

Estimate Revisions

Estimates for this year are moving in the wrong direction with the Zacks Consensus Estimate moving from $4.30 90 days ago to the current level of $4.14.  The same can be said of the 2018 Zacks Consensus Estimate which moved from $4.80 to $4.60 over the same time period.

This move lower in earnings estimates is the key reason why this stock is now a Zacks Rank #5 (Strong Sell) as well as the reason for it being the Bear of the Day today.

 

 

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