The Scotts Miracle-Gro Company SMG stock looks promising at the moment. The company’s shares have rallied more than 30% year to date.
We are positive regarding the company’s prospects and believe that the time is right to add the stock to your portfolio. The stock looks promising and is poised to carry the momentum ahead.
Let’s see what makes the company an appropriate investment option at the moment.
An Outperformer
Scotts Miracle-Gro has significantly outperformed the industry it belongs to in the past year. The company’s shares have surged 38.9% against 26.5% decline of the industry. The company also outpaced the S&P 500’s rise of 5.6% over the same period.
Upbeat FY20 View
In June, the company raised its fiscal 2020 guidance based on higher demand in the U.S. Consumer and Hawthorne segments.
For fiscal 2020 (ending Sep 30, 2020), Scotts Miracle-Gro projects company-wide sales growth in the range of 16-18% compared with 6-8% growth expected earlier. The upbeat view is supported by stronger growth in the U.S. Consumer unit, where the company now expects 9-11% growth compared with the previous expectation of 1-3% increase. In the Hawthorne segment, the company expects sales growth of 45-50% for fiscal 2020 compared with 30-35% expected earlier.
Based on the above assumptions, the company now projects adjusted earnings per share (EPS) in the range $5.65-$5.85 compared with $4.95-$5.15 expected earlier.
Bright Prospects for Hawthorne
Scotts Miracle-Gro is also benefiting from synergies of the Sunlight Supply acquisition. The buyout creates unique competitive advantages for the company’s Hawthorne division. The acquisition has provided the company with a modern and cost-efficient supply chain in the hydroponic industry. The buyout is expected to contribute to growth in adjusted EPS and total sales in fiscal 2020.
Estimates Northbound
Earnings estimate revisions have the great impact on stock prices. The Zacks Consensus Estimate for Scotts Miracle-Gro fiscal’s third-quarter earnings moved up 13.6% in the past two months. Further, the company’s earnings for fiscal 2020 is currently pegged at $5.79 per share, which suggests year-over-year growth of 29.5%.
The Scotts MiracleGro Company Price and Consensus
The Scotts MiracleGro Company price-consensus-chart | The Scotts MiracleGro Company Quote
Zacks Rank & Other Key Picks
Scotts Miracle-Gro currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 75.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 135.1% in the past year.
AngloGold has an expected earnings growth rate of 109.9% for 2020. The company’s shares have surged 70.5% in the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year’s 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research