ScottsMiracle-Gro (SMG) Updates Financial Outlook for Fiscal 2021

·3 min read

The ScottsMiracle-Gro Company SMG announced an increase in its earnings and sales guidance for fiscal 2021 owing to continued strength in the U.S. Consumer and Hawthorne segments.

For fiscal 2021, ScottsMiracle-Gro now expects company-wide sales growth of 17-19%. This update in outlook is primarily due to stronger growth in the U.S. Consumer segment. In this segment, the company now expects sales growth in the band of 7-9% compared with the previous guidance of 4-6%.

The Hawthorne segment is forecast to witness sales growth of 40-45% for the full year, compared with the earlier guidance of 30-40%.

The company also expects adjusted earnings per share (EPS) in the range of $9.00-$9.30 per share for fiscal 2021, higher than the previous range of $8.60-$9.00 per share.

Due to higher investment in both segments, the company expects selling, general and administrative expenses for the full year to be flat to modestly higher than a year ago. The full-year guidance for gross margin rate remains unchanged with an expected decline of 175-225 basis points.

Although commodity prices are higher than the previous year, the company is focused on ensuring that the pricing effective in August will offset commodity pressures as it prepares for next season. It is prepared to be more aggressive on pricing decisions, if required, to stay ahead of those costs, the company noted.

Shares of ScottsMiracle-Gro have surged 52.3% in the past year compared with 75.6% rise of the industry.

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The company reported strong results for second-quarter fiscal 2021, with earnings and sales topping expectations. Adjusted EPS of $5.64 per share rose 25.3% year over year and surpassed the Zacks Consensus Estimate of $5.51.

Net sales also rallied 32.3% year over year to $1,828.8 million and beat the consensus mark of $1739.5 million. The upside was primarily driven by strong retailer support for its lawn and garden products as well as continued momentum in the Hawthorne segment.

Zacks Rank & Key Picks

ScottsMiracle-Gro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Dow Inc. DOW, Nucor Corporation NUE and Cabot Corporation CBT.

Dow has a projected earnings growth rate of around 261.5% for the current year. The company’s shares have surged 69.2% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has an expected earnings growth rate of around 238% for the current year. The company’s shares have gained 151.1% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of roughly 126% for the current fiscal. The company’s shares have surged 65.1% in the past year. It currently flaunts a Zacks Rank #1.

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