Why Scotts Miracle-Gro Shares Plunged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Scotts Miracle-Gro (NYS: SMG) sank 10% on Wednesday after the lawn- and garden-care specialist said it would fall short of its full-year guidance.

So what: Scotts Miracle-Gro usually benefits from the peak gardening season in mid to late May, but slowing sales momentum at its biggest U.S. retail partners reinforces fears over a declining trend for lawn and garden care. Additionally, poor weather and economic uncertainty continues to weigh on the company's European business, giving investors little hope for a near-term turnaround.  


Now what: As a result of the weak year-to-date demand, management expects to fall short of its previous outlook of 6% to 8% sales growth and adjusted EPS of $2.65 to $2.85. "While we remain confident in the long-term growth opportunities in our business, it is clear that near-term category growth has become harder to achieve," Chairman and CEO Jim Hagedorn said. Of course, with the stock down roughly 30% over just the past couple of months and currently sporting a 3%-plus dividend yield, now might be an opportune time to buy into that long-term optimism.  

Interested in more info onScotts Miracle-Gro?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Scotts Miracle-Gro. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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