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The Scotts Miracle Gro Co A SMG

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Raising Scotts Miracle-Gro FVE to $140 on Improved Near-Term Outlook; Shares Materially Overvalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

Scotts Miracle-Gro reported a solid start to the fiscal year, as the company generated its first-ever profit during the fiscal first quarter. The profit was driven by continued growth in both the U.S. consumer and Hawthorne segments. While management increased its 2021 guidance for the Hawthorne segment, companywide adjusted EPS guidance remained at a range of $8.00 to $8.40. We have slightly increased our near-term outlook for Scotts in both segments and now forecast that Scotts will come in at the high end of the range versus our previous forecast, which was around the midpoint. However, our long-term forecast remains intact. Having updated our model to reflect these changes, we raise our Scotts fair value estimate to $140 from $135. Our narrow moat rating is unchanged.

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Company Profile

Business Description

Scotts Miracle-Gro is the largest provider of gardening and lawncare products in the United States. The majority of the company's sales are to large retailers that include Home Depot, Lowe's, and Walmart. Scotts Miracle-Gro can sell its products at a higher price point than its competition because of a well-recognized portfolio of brands that include Miracle-Gro, Roundup, Ortho, Tomcat, and Scotts. Scotts is also the leading supplier of cannabis-growing equipment in North America through its Hawthorne business.

14111 Scottslawn Road
Marysville, OH, 43041
T +1 937 644-0011
Sector Basic Materials
Industry Agricultural Inputs
Most Recent Earnings Dec 31, 2020
Fiscal Year End Sep 30, 2020
Stock Type Cyclical
Employees 5,932