Yahoo Finance Scotts Miracle-Gro (SMG) Raises Guidance on Strong Demand
The Scotts Miracle-Gro Company SMG has issued revised guidance for fiscal 2020 based on higher demand in the U.S. Consumer and Hawthorne segments.
For fiscal 2020 (ending Sep 30, 2020), Scotts Miracle-Gro projects company-wide sales growth in the range of 16-18% compared with 6-8% growth expected earlier. The upbeat view is mainly due to stronger growth in the U.S. Consumer unit, where the company now expects 9-11% growth compared with the previous range of 1-3% increase. In the Hawthorne segment, the company now expects sales growth of 45-50% for fiscal 2020 compared with 30-35% expected earlier.
Based on the above assumptions, the company now projects adjusted earnings per share (EPS) in the range of $5.65-$5.85 compared with $4.95-$5.15 expected earlier. Further, Scotts Miracle-Gro expects adjusted gross margin rate to be flat-to-slightly lower in fiscal 2020 as the strength in Hawthorne has a dilutive impact on the company-wide rate.
Nevertheless, the segments are expected to witness year-over-year improvement in gross margin rate. Hawthorne is also on track to meet or exceed its operating margin rate of 10% based on the unit’s income, as a percentage of sales. Moreover, the company expects adjusted free cash flow to be around $350 million.
Shares of Scotts Miracle-Gro have surged 52.2% in the past year against the industry’s 20.3% decline.
Zacks Rank & other Key Picks
Scotts Miracle-Gro currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Barrick Gold Corporation GOLD, Royal Gold, Inc. RGLD and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Barrick has an expected earnings growth rate of 64.7% for 2020. The company’s shares have surged 82.2% in the past year.
Royal Gold has an expected earnings growth rate of 66.2% for fiscal 2020. Its shares have returned 37% in the past year.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have surged 75.3% in the past year.
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