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Why Is Scotts (SMG) Down 21% Since Last Earnings Report?
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A month has gone by since the last earnings report for Scotts Miracle-Gro (SMG - Free Report) . Shares have lost about 21% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Scotts Miracle-Gro’s Earnings and Sales Beat Estimates in Q2
Scotts Miracle-Gro reported earnings from continuing operations of $276.5 million or $4.94 per share in second-quarter fiscal 2022 (ended Apr 2, 2022) compared with $311.1 million or $5.44 per share in the year-ago quarter.
Barring one-time items, the adjusted earnings were $5.03 per share compared with $5.64 a year ago. The figure topped the Zacks Consensus Estimate of $4.69.
Net sales fell 8.2% year over year to $1,678.4 million and beat the consensus mark of $1,650.9 million.
Company-wide gross margin rate (as adjusted) was 35.4% compared with 36.6% in the year-ago quarter.
Segment Details
In the second quarter, net sales in the U.S. Consumer division remained flat year over year at $1,379.8 million. The segment delivered a profit of $428.9 million, down 2% year over year.
Net sales in the Hawthorne segment declined 44% year over year to $202.6 million in the reported quarter. The segment reported a profit of $3.3 million, down 92% year over year.
Net sales in the Other segment rose 5% year over year to $96 million. The segment reported a profit of $10.5 million, down 40% year over year.
Balance Sheet
At the end of the second quarter, the company had cash and cash equivalents of $17.1 million, up 18.8% year over year. The long-term debt was $3,350 million, up 44.3% year over year.
Outlook
The company expects better weather, strong retailer promotions through Memorial Day and favorable comparisons for the rest of the season to be tailwinds. It envisions the bottom end of its U.S. Consumer unit sales guidance of +2% to -2%from the last year’s level to be the most likely outcome. For Hawthorne, based on recent trends, the company expects the low end of its sales guidance as the best outcome. SMG also noted that its earlier-communicated adjusted earnings per share guidance of $8 or more for the full year is likely to be unattainable.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -20.61% due to these changes.
VGM Scores
At this time, Scotts has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Scotts has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Scotts (SMG) Down 21% Since Last Earnings Report?
A month has gone by since the last earnings report for Scotts Miracle-Gro (SMG - Free Report) . Shares have lost about 21% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Scotts Miracle-Gro’s Earnings and Sales Beat Estimates in Q2
Scotts Miracle-Gro reported earnings from continuing operations of $276.5 million or $4.94 per share in second-quarter fiscal 2022 (ended Apr 2, 2022) compared with $311.1 million or $5.44 per share in the year-ago quarter.
Barring one-time items, the adjusted earnings were $5.03 per share compared with $5.64 a year ago. The figure topped the Zacks Consensus Estimate of $4.69.
Net sales fell 8.2% year over year to $1,678.4 million and beat the consensus mark of $1,650.9 million.
Company-wide gross margin rate (as adjusted) was 35.4% compared with 36.6% in the year-ago quarter.
Segment Details
In the second quarter, net sales in the U.S. Consumer division remained flat year over year at $1,379.8 million. The segment delivered a profit of $428.9 million, down 2% year over year.
Net sales in the Hawthorne segment declined 44% year over year to $202.6 million in the reported quarter. The segment reported a profit of $3.3 million, down 92% year over year.
Net sales in the Other segment rose 5% year over year to $96 million. The segment reported a profit of $10.5 million, down 40% year over year.
Balance Sheet
At the end of the second quarter, the company had cash and cash equivalents of $17.1 million, up 18.8% year over year. The long-term debt was $3,350 million, up 44.3% year over year.
Outlook
The company expects better weather, strong retailer promotions through Memorial Day and favorable comparisons for the rest of the season to be tailwinds. It envisions the bottom end of its U.S. Consumer unit sales guidance of +2% to -2%from the last year’s level to be the most likely outcome. For Hawthorne, based on recent trends, the company expects the low end of its sales guidance as the best outcome. SMG also noted that its earlier-communicated adjusted earnings per share guidance of $8 or more for the full year is likely to be unattainable.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -20.61% due to these changes.
VGM Scores
At this time, Scotts has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Scotts has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.