Scotts Miracle-Gro Company Earnings Preview

Motley Fool Staff
Updated

Investors braced for a bumpy ride ahead of Scotts Miracle-Gro's (NYS: SMG) earnings announcement, as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Tuesday, Nov. 8. Scotts Miracle-Gro is a manufacturer and marketer of consumer branded non-durable products for lawn and garden care and professional horticulture in North America and Europe.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Scotts Miracle-Gro, with eight of 11 analysts rating it hold. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.

  • Revenue forecasts: On average, analysts predict $414.6 million in revenue this quarter. That would represent a decline of 12.8% from the year-ago quarter.

  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.44 per share. Estimates range from a loss of $0.51 to a loss of $0.39.

What our community says:
CAPS All-Stars are solidly behind the stock, with 90.5% assigning it an outperform rating. The community at large agrees with the All-Stars, with 87.3% awarding it a rating of outperform. Fools have embraced Scotts Miracle-Gro and haven't been shy with their opinions lately, logging 129 posts in the past 30 days. Despite the majority sentiment in favor of Scotts Miracle-Gro, the stock has a middling CAPS rating of three out of five stars.

Management:
The company's gross margin shrank by 3 percentage points in the last quarter. Revenue fell 14.5%, while cost of sales fell 10.3% to $658.6 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

37.8%

41%

21.3%

29.7%

Operating Margin

18.2%

21.7%

(41.1%)

(9.4%)

Net Margin

10.5%

15.7%

(29.5%)

(6.9%)

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At the time thisarticle was published

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