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.