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ScottsMiracle-Gro (SMG) Updates Outlook for Fiscal 2021

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Zacks Equity Research
·3 min read
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The ScottsMiracle-Gro Company SMG recently announced that it now expects to report sales growth in the band of 4-6% in its U.S. Consumer segment for fiscal 2021, which suggests an increase from its earlier sales guidance of flat to -5%.

The Hawthorne segment is forecast to witness a sales growth at the top-end of the guidance of 20-30%. Hence, company-wide sales growth of 8-12% is now expected, up from the previous guidance of 1-6%.

The company also expects adjusted earnings per share (EPS) in a range of $8.60-$9.00 per share, higher than the previous range of $8.00-$8.40 per share. Free cash flow of the company is projected to be roughly $250 million, compared with the prior guidance of $325 million. The downside in guidance is due to a forecasted increase in capital expenditures for the year ending Sep 30, which is required due to the accelerated pace of growth in the past several years.

The company expects to double the amount of capital spending this year in the range of $125-$150 million. The company noted that it is possible a similar investment may be required in fiscal 2022 as well.

Shares of ScottsMiracle-Gro have surged 120.9% in the past year compared with 86.5% rise of the industry.

The company reported strong results for first-quarter fiscal 2021, with earnings and sales topping expectations. Adjusted EPS of 39 cents per share rose 134.8% year over year and surpassed the Zacks Consensus Estimate of a loss of 73 cents.

Net sales also surged 104.6% year over year to $748.6 million and beat the consensus mark of $616 million. The upside was primarily driven by strong retailer support in the U.S. Consumer segment and continued momentum in the Hawthorne segment.

The Scotts MiracleGro Company Price and Consensus

The Scotts MiracleGro Company Price and Consensus
The Scotts MiracleGro Company Price and Consensus

The Scotts MiracleGro Company price-consensus-chart | The Scotts MiracleGro Company Quote

Zacks Rank & Other Key Picks

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

Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, Nucor Corporation NUE and Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have surged 111.8% 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 135.3% for the current fiscal. The company’s shares have gained 109.8% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have rallied 185.3% in the past year. It currently flaunts a Zacks Rank #1.

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The Scotts MiracleGro Company (SMG) : Free Stock Analysis Report

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