The Scotts Miracle Gro Co (SMG, Financial) has experienced a notable fluctuation in its stock price over recent months. With a current market capitalization of $3.84 billion, the company's shares are trading at $67.79. Over the past week, SMG's stock has seen a slight decline of 1.60%, yet when looking at the broader picture, the past three months have witnessed an impressive 11.33% increase. This growth comes after a period where the stock was considered modestly undervalued, with a past GF Value of $78.01. Currently, the stock is deemed fairly valued, with a GF Value of $64.95, indicating a stabilization in its market perception.
Introduction to The Scotts Miracle Gro Co
The Scotts Miracle Gro Co, a leader in the agriculture industry, stands as the largest provider of gardening and lawncare products in the U.S. The company boasts a strong retail presence, with major clients like Home Depot, Lowe's, and Walmart. Its premium pricing strategy is supported by a portfolio of well-recognized brands such as Miracle-Gro, Roundup, Ortho, Tomcat, and Scotts. Additionally, Scotts has carved out a significant niche in the burgeoning cannabis sector through its Hawthorne business, becoming North America's leading supplier of cannabis-growing equipment.
Assessing Profitability
When it comes to profitability, SMG holds a strong Profitability Rank of 7 out of 10. The company's operating margin stands at 2.47%, which is commendable within its industry, surpassing 30.38% of 237 companies. However, the Return on Assets (ROA) presents a different picture at -9.38%, though it still outperforms 13.89% of 252 companies. The Return on Invested Capital (ROIC) is at 1.87%, better than 33.86% of 251 companies. Over the past decade, SMG has maintained profitability for 8 years, a record that is more robust than 42.92% of 226 companies in the same space.
Growth Prospects and Challenges
SMG's Growth Rank is currently at 3 out of 10. The company has faced challenges, with a 3-Year Revenue Growth Rate per Share at -4.40%, which still outpaces 8.81% of 227 companies. The 5-Year Revenue Growth Rate per Share is more positive at 7.00%, better than 41.06% of 207 companies. However, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at -3.69%. The 3-Year EPS without NRI Growth Rate has significantly declined by -44.90%, and the 5-Year EPS without NRI Growth Rate has decreased by -14.80%. These figures suggest that while SMG has had historical success, it faces headwinds that may impact future growth.
Notable Shareholders
Among SMG's notable shareholders, Mario Gabelli (Trades, Portfolio) holds 209,175 shares, representing 0.37% of the company, followed by Ken Fisher (Trades, Portfolio) with 194,643 shares, or 0.34%, and Tom Gayner (Trades, Portfolio) with 156,000 shares, accounting for 0.28%. These investors' commitments to SMG reflect a belief in the company's value proposition and future potential.
Competitive Landscape
In comparison to its competitors, SMG holds a significant market capitalization advantage. Lavoro Ltd (LVRO, Financial) has a market cap of $607.529 million, Bioceres Crop Solutions Corp (BIOX, Financial) is valued at $775.235 million, and CVR Partners LP (UAN, Financial) stands at $680.370 million. SMG's larger size may afford it greater resources and market influence, but it also faces the challenge of maintaining growth and profitability in a competitive sector.
Conclusion
In summary, The Scotts Miracle Gro Co's stock performance has been a mixed bag, with recent gains overshadowing a short-term decline. The company's market position is strong, bolstered by its brand recognition and strategic foothold in the cannabis equipment market. While profitability remains solid, growth metrics indicate potential challenges ahead. The investment stakes of notable shareholders and a comparative analysis of competitors by market capitalization reveal a company with both strengths and areas for improvement. As SMG navigates the evolving landscape of the agriculture industry, investors will be watching closely to see how it sustains its market leadership and addresses growth concerns.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
