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Scotts Miracle-Gro (SMG) Beats Q3 Earnings and Sales Estimates

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The Scotts Miracle-Gro Company (SMG - Free Report) reported net income from continuing operations of $229.8 million or $4.00 per share in third-quarter fiscal 2021 (ended Jul 3, 2021) compared with a net profit of $204.3 million or $3.57 per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) were $3.98 per share, up 4.7% year over year. The figure topped the Zacks Consensus Estimate of $3.50.

Net sales went up 7.8% year over year to $1,609.7 million and beat the consensus mark of $1,511.7 million.

Company-wide gross margin rate (as adjusted) was 30.7% compared with 35.3% in the year-ago quarter.

The Scotts MiracleGro Company Price, Consensus and EPS Surprise

 

The Scotts MiracleGro Company Price, Consensus and EPS Surprise

The Scotts MiracleGro Company price-consensus-eps-surprise-chart | The Scotts MiracleGro Company Quote

 

Segment Details

In the third quarter, net sales in the U.S. Consumer division declined 4% year over year to $1,046.2 million. The segment reported profits of $264.4 million, down 16% from a profit of $313.8 million in the prior-year quarter. 

Net sales in the Hawthorne segment surged 48% year over year to $421.9 million in the reported quarter. The segment witnessed record sales in the reported quarter with growth in all categories. The segment’s profits increased 37% year over year to $51.9 million.

Net sales in the Other segment increased 24% year over year to $141.6 million. The segment’s profits increased 86% year over year to $26.8 million.

Balance Sheet

At the end of third quarter, the company had cash and cash equivalents of $58.3 million, up 20.7% year over year. Long-term debt was $2,132 million, up 40.6% year over year.

Outlook

The company continues to expect sales in the Hawthorne segment for fiscal 2021 to rise 40-45%. U.S. Consumer sales growth guidance has also been reaffirmed at 7-9%.

The gross margin rate is now projected to decline 250-275 basis points (bps) year over year. The company also expects adjusted EPS in the range of $9.00-$9.30 for the full year.

The company noted that the continued pressure from commodity prices is likely to result in a lower gross margin rate than what it had expected in its earlier guidance in June. However, the company is evaluating offsets to that pressure, which will help it maintain earnings guidance on a full-year basis.

Price Performance

Shares of Scotts Miracle-Gro have inched up 2.5% in the past year compared with 50.8% rise of the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Nucor Corporation (NUE - Free Report) , Dow Inc. (DOW - Free Report) and Cabot Corporation (CBT - Free Report) .

Nucor has a projected earnings growth rate of around 455.7% for the current year. The company’s shares have surged 128.9% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has an expected earnings growth rate of around 403.01% for the current year. The company’s shares have gained 43.1% in the past year. It currently flaunts a Zacks Rank #1.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have rallied 37.8% in the past year. It currently holds a Zacks Rank #2 (Buy).