How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Scotts Miracle-Gro (SMG) ten years ago? It may not have been easy to hold on to SMG for all that time, but if you did, how much would your investment be worth today?
Scotts Miracle-Gro's Business In-Depth
With that in mind, let's take a look at Scotts Miracle-Gro's main business drivers.
Based in Marysville, OH, The Scotts Miracle-Gro Company is a leading producer and marketer of branded garden and consumer lawn products. The company makes, markets and sells garden and lawn products in various categories including Lawn Care, Gardening and Landscape, Hydroponics, Controls and Marketing Agreement.
The company’s products are marketed under some of the most recognized brand names in North America like Scotts and Turf Builder lawn and grass seed products, LiquaFeed and Osmocote gardening and landscape products.
In the United Kingdom, some of its major brands are Miracle-Gro plant fertilizers, EverGreen lawn fertilizers, Weedol and Pathclear herbicides and Levington gardening and landscape products.
Scotts Miracle-Gro’s operations are mainly focused on three reportable business segments — U.S. Consumer, Hawthorne and Other.
U.S. Consumer (68% of Fiscal 2020 Sales) – The division consists of consumer garden and lawn business located in the United States. The lawn care products include lawn fertilizers, grass seed products along with lawn-related pest, weed and disease control products. The landscape and gardening category enable consumers to grow vegetable and flower gardens and beautify landscape. It includes complete array water-soluble plant foods.
Hawthorne (26%) – The segment consists of urban, indoor and hydroponic gardening business. The hydroponic category enables consumers to grow flowers, plants as well as vegetables in an urban and indoor environment using very little or no soil.
Other (6%) – This division consists of consumer lawn and garden business in regions other than the United States and the products are sold to commercial nurseries, greenhouses and other professional customers.
In June 2018, the company’s Hawthorne division acquired all the assets along with certain liabilities of Sunlight Supply, Inc and subsidiaries. Notably, Sunlight Supply is the largest distributor of hydroponic products in the United States. The buyout strengthens the Scotts Miracle-Gro’s Hawthorne segment.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Scotts Miracle-Gro a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in April 2011 would be worth $4,085.40, or a 308.54% gain, as of April 16, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
The S&P 500 rose 216.02% and the price of gold increased 14% over the same time frame in comparison.
Looking ahead, analysts are expecting more upside for SMG.
Earnings estimates for Scotts Miracle-Gro for the fiscal second quarter have been increasing over the past month. The company is expected to benefit from synergies of the Sunlight Supply acquisition. The buyout provides it with modern and cost-efficient supply chain. Moreover, the company’s prospects in the hydroponic products appear bright in the long term. The company is likely to gain from long-term prospects and cost-saving opportunities associated with the Hawthorne division. It is witnessing strong sales in this unit. Moreover, the company is gaining from the new line of organic plant food products. It has also outperformed the industry over a year. However, the company’s high marketing expenses are exerting pressure on its margins. Higher capital expenditure, rising debt and stretched valuation are other concerns.
The stock is up 5.44% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 3 higher, for fiscal 2021. The consensus estimate has moved up as well.
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