The Scotts Miracle-Gro Company (SMG - Free Report) reported net income from continuing operations of $249.8 million or $4.43 per share in second-quarter fiscal 2020 (ended Mar 28, 2020), down from $396.9 million or $7.10 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) was $4.50, up 23.6% year over year. The figure beat the Zacks Consensus Estimate of $4.07.
Net sales rose 16.2% year over year to $1,382.8 million. However, the figure missed the consensus mark of $1,389.2 million.
Company-wide gross margin rate (as adjusted) rose to 40% from 39.8% in the year-ago quarter.
In the fiscal second quarter, net sales in the U.S. Consumer division increased 11% year over year to $1,102.7 million. Profitability in the unit increased 17% year over year to $372.9 million.
Net sales in the Hawthorne segment rose 60% year over year to $230 million in the reported quarter, driven by strong demand in almost all categories. The segment’s profit surged 148% year over year to $25.5 million.
Net sales in the Other segment fell 4% year over year to $50.1 million. The segment’s profitability rose 5% year over year to $4 million in the quarter.
In the fiscal second quarter, the company had cash and cash equivalents of $30.8 million, down 17.9% year over year. Long-term debt was $ 2,113.8 million, up 3.7% year over year.
For fiscal 2020, the company has reaffirmed its sales growth outlook for the U.S. Consumer unit of 1-3%. It now expects sales in the Hawthorne segment to rise 30-35% in fiscal 2020. Based on these assumptions, it projects company-wide sales growth between 6% and 8% for the full year. The company expects to achieve its adjusted EPS guidance of $4.95-$5.15.
Shares of Scotts Miracle-Gro have surged 59.7% in the past year against the industry’s 26.3% decline.
Zacks Rank & Other Key Picks
Scotts Miracle-Gro currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , Newmont Corporation (NEM - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Agnico Eagle has an expected earnings growth rate of 74.2% for 2020. The company’s shares have surged 58.7% in the past year.
Newmont has an expected earnings growth rate of 96.2% for 2020. Its shares have returned 108.8% in the past year.
Franco-Nevada has an expected earnings growth rate of 22% for 2020. The company’s shares have surged 89.2% in the past year.
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