The Scotts Miracle-Gro Company (SMG - Free Report) stock looks promising at the moment based on compelling growth prospects for fiscal 2019. The company’s shares have gained around 22% over the past six months.
Scotts Miracle-Gro currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve into the factors that make Scotts Miracle-Gro stock an attractive investment option at the moment.
In July 2019, Scotts Miracle-Gro raised its guidance for fiscal 2019 for the second time.
The company now expects adjusted earnings per share (EPS) in the band of $4.35-$4.50 compared with $4.20-$4.40 expected earlier. Per the company, revised guidance for company-wide sales growth of 16-17% assumes that sales in the Hawthorne unit will increase around 90% year over year to $650 million in fiscal 2019. The U.S. Consumer segment is expected to grow 6-7%.
Acquisitions and Hawthorne to Drive Growth
The company will gain from the synergies of the Sunlight Supply acquisition. The buyout provides it with modern and cost-efficient supply chain in the hydroponic industry that will benefit its retail and end consumers.
Moreover, the integration of Sunlight Supply is on track. The company continues to expect nearly $30 million in synergies from the transaction by the end of fiscal 2019.
Scotts Miracle-Gro is witnessing strong growth in the Hawthorne segment. Sales in the segment surged nearly 138% in the fiscal third quarter, mainly driven by the acquisition of Sunlight Supply. Scotts Miracle-Gro is expected to benefit from long-term prospects and cost-saving opportunities associated with the Hawthorne division.
Scotts Miracle-Gro has significantly outperformed the industry it belongs to year to date. The company’s shares have rallied 65.7% against the 0.5% decline of the industry. The company has also outpaced the S&P 500’s rise of 7.2% for the same period.
Estimates Moving Up
Earnings estimate revisions have the greatest impact on stock prices. Estimates for fiscal 2019 for Scotts Miracle-Gro have moved up 3.9% in the past three months. The Zacks Consensus Estimate for earnings for the fiscal is currently pegged at $4.50 per share, which indicates an expected year-over-year rise of around 21.4%.
Other Key Picks
Some other top-ranked stocks in the basic materials space are Kinross Gold Corporation (KGC - Free Report) , Royal Gold, Inc (RGLD - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , each sporting a Zacks Rank #1.
Kinross has an expected earnings growth rate of 170% for 2019. The company’s shares have surged 60.7% in the past year.
Royal Gold has a projected earnings growth rate of 82.1% for fiscal 2020. The company’s shares have rallied 58.6% in a year’s time.
Agnico Eagle has an estimated earnings growth rate of 158.6% for the current year. Its shares have moved up 38.5% in the past year.
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