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Scotts Miracle-Gro Approves Share Repurchase Worth $750M

Zacks Equity Research

The Scotts Miracle-Gro Company SMG announced that its board approved a new share repurchase program of up to $750 million over the next three years.

The company noted that the timing and number of shares to be repurchased will depend upon numerous factors such as business performance, market conditions, share price and alternative investment opportunities.

Per management, over the past few years, it has made substantial improvements in cash flow generation, thereby, offering it the flexibility to invest in growth and return cash to shareholders.

The company does not expect any significant acquisition activity in the near future. Notably, it continues to explore prospects in both U.S. Consumer and Hawthorne segments. Scotts Miracle-Gro also stated that it will suspend or slow down share repurchase activity in the future if it believes that there is a more beneficial use of cash to deliver value to shareholders.

Shares of the company have surged 60.4% in the past year against the industry’s 15.1% decline.



In January, Scotts Miracle-Gro reported adjusted loss per share (EPS) of $1.12 for first-quarter fiscal 2020 (ended Dec 28, 2019), narrower than a loss of $1.39 reported in the year-ago quarter. Notably, the Zacks Consensus Estimate for loss was pegged at $1.24.

Net sales went up 23% year over year to $365.8 million and beat the Zacks Consensus Estimate of $347.7 million.

Scotts Miracle-Gro witnessed strong momentum in the U.S. Consumer unit in fiscal 2019, which also continued in fiscal 2020. Moreover, it continues to see outstanding performance across all product categories in the Hawthorne business in the United States.

Moving ahead, the company is upbeat about its fiscal 2020 guidance. Scotts Miracle-Gro expects company-wide sales growth of 4-6% for fiscal 2020. It continues to expect adjusted earnings per share of $4.95-$5.15 for the fiscal year.

The Scotts Miracle-Gro Company Price and Consensus


The Scotts Miracle-Gro Company Price and Consensus

The Scotts Miracle-Gro Company price-consensus-chart | The Scotts Miracle-Gro Company Quote

Zacks Rank & Other Stocks to Consider

Scotts Miracle-Gro currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Commercial Metals Company CMC.

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 74.2% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has an estimated earnings growth rate of 79.3% for fiscal 2020. It currently flaunts a Zacks Rank #1. The company’s shares have rallied 23.7% in a year.

Commercial Metals has a Zacks Rank #2 and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 36.4% in a year.

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The Scotts Miracle-Gro Company (SMG) : Free Stock Analysis Report
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