Back to top

Image: Shutterstock

Scotts Miracle-Gro Up 24% in 3 Months: What's Driving It?

Read MoreHide Full Article

Shares of The Scotts Miracle-Gro Company (SMG - Free Report) have gained 23.8% in the past three months against the industry’s 13.3% decline and the S&P 500’s 1.7% fall.


 

The company has a market cap of around $7.9 billion. Average volume of shares traded in the past three months was nearly 563.5K. The company’s long-term expected earnings per share (EPS) growth rate is pegged at 8.8%.

Let’s discuss the factors that are driving the stock.

Solid second-quarter fiscal 2020 results, upbeat fiscal 2020 view and healthy prospects of the Hawthorne business are contributing to the company’s share price appreciation.

Scotts Miracle-Gro’s adjusted EPS for second-quarter fiscal 2020 rose 23.6% year over year to $4.50. The figure topped the Zacks Consensus Estimate of $4.07.

For fiscal 2020, the company reaffirmed its sales growth outlook for the U.S. Consumer unit at the range of 1-3%. It 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 adjusted EPS in the range of $4.95-$5.15.

The company is benefiting from synergies of the Sunlight Supply acquisition. The buyout has provided the company with a modern and cost-efficient supply chain in the hydroponic industry. In the fiscal second quarter, net sales in the Hawthorne segment rose 60% year over year on strong demand in almost all categories.

Scotts Miracle-Gro is also benefiting from its new line of organic plant food and growing media products — Miracle-Gro Performance Organics. Performance Organics generated sales of nearly $40 million in fiscal 2019 and contributed to a 6% rise in the consumer purchases of the company’s branded soils. The momentum is likely to continue in fiscal 2020.

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 Ltd. (AEM - Free Report) , Royal Gold, Inc. (RGLD - Free Report) and Newmont Corp. (NEM - Free Report) . While Agnico Eagle sports a Zacks Rank #1 (Strong Buy), Royal Gold and Newmont carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 75.3% for 2020. The company’s shares have surged 51.2% in the past year.

Royal Gold has an expected earnings growth rate of 67.6% for fiscal 2020. Its shares have returned 53.5% in the past year.

Newmont has an expected earnings growth rate of 82.6% for 2020. The company’s shares have surged 83% in the past year.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in