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Why Is Scotts (SMG) Up 15.9% 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 added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Scotts due for a pullback? 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 catalysts.
Scotts Miracle-Gro’s Q1 Earnings Top Estimates, Sales Lag
Scotts Miracle-Gro reported a first-quarter fiscal 2024 (ended Dec 31, 2023) loss of $80.5 million or $1.42 per share compared with a loss of $64.7 million or $1.17 per share in the year-ago quarter.
Barring one-time items, the adjusted loss was $1.45 per share, wider than a loss of $1.02 a year ago. The figure was narrower than the Zacks Consensus Estimate of a loss of $1.62.
Net sales fell around 22% year over year to $410.4 million and also lagged the consensus mark of $423.3 million. Due to seasonality, the first quarter typically represents less than 15% of full-year sales.
Segment Details
In the fiscal first quarter, net sales in the U.S. Consumer division were down 17% year over year to $306.7 million. It was lower than our estimate of $352.4 million.
Net sales in the Hawthorne segment plunged 39% year over year to $80.1 million in the reported quarter. The figure was higher than our estimate of $57.9 million. The downside reflects sustained pressure on the indoor and hydroponic industry and SMG’s move to restructure the business.
Net sales in the other segment fell 10% year over year to $23.6 million.
Balance Sheet
At the end of the quarter, the company had cash and cash equivalents of $10.4 million, down from $25.6 million in the year-ago quarter. Long-term debt was $2,969 million, down from $3,189.6 million in the year-ago quarter.
Outlook
The company reaffirmed its fiscal 2024 guidance, except for Hawthorne net sales, which are undergoing strategic changes. While the full impact on net sales is uncertain, Hawthorne aims for positive cash flow this year. The company's main objective is to strengthen its balance sheet, targeting $575 million adjusted EBITDA and $560 million free cash flow to achieve $1 billion in free cash flow over two years.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Scotts has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Scotts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Scotts (SMG) Up 15.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Scotts Miracle-Gro (SMG - Free Report) . Shares have added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Scotts due for a pullback? 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 catalysts.
Scotts Miracle-Gro’s Q1 Earnings Top Estimates, Sales Lag
Scotts Miracle-Gro reported a first-quarter fiscal 2024 (ended Dec 31, 2023) loss of $80.5 million or $1.42 per share compared with a loss of $64.7 million or $1.17 per share in the year-ago quarter.
Barring one-time items, the adjusted loss was $1.45 per share, wider than a loss of $1.02 a year ago. The figure was narrower than the Zacks Consensus Estimate of a loss of $1.62.
Net sales fell around 22% year over year to $410.4 million and also lagged the consensus mark of $423.3 million. Due to seasonality, the first quarter typically represents less than 15% of full-year sales.
Segment Details
In the fiscal first quarter, net sales in the U.S. Consumer division were down 17% year over year to $306.7 million. It was lower than our estimate of $352.4 million.
Net sales in the Hawthorne segment plunged 39% year over year to $80.1 million in the reported quarter. The figure was higher than our estimate of $57.9 million. The downside reflects sustained pressure on the indoor and hydroponic industry and SMG’s move to restructure the business.
Net sales in the other segment fell 10% year over year to $23.6 million.
Balance Sheet
At the end of the quarter, the company had cash and cash equivalents of $10.4 million, down from $25.6 million in the year-ago quarter. Long-term debt was $2,969 million, down from $3,189.6 million in the year-ago quarter.
Outlook
The company reaffirmed its fiscal 2024 guidance, except for Hawthorne net sales, which are undergoing strategic changes. While the full impact on net sales is uncertain, Hawthorne aims for positive cash flow this year. The company's main objective is to strengthen its balance sheet, targeting $575 million adjusted EBITDA and $560 million free cash flow to achieve $1 billion in free cash flow over two years.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Scotts has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Scotts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.