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Why Is Scotts (SMG) Down 16.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Scotts Miracle-Gro (SMG - Free Report) . Shares have lost about 16.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Scotts Miracle-Gro Tops Q2 Earnings and Sales Estimates
Scotts Miracle-Gro reported net income from continuing operations of $311.1 million or $5.44 per share in second-quarter fiscal 2021 (ended Apr 3, 2021) compared with a net profit of $249.8 million or $4.43 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) were $5.64 per share, up 25.3% year over year. The figure topped the Zacks Consensus Estimate of $5.51.
Net sales rallied 32.3% year over year to $1,828.8 million and beat the consensus mark of $1,739.5 million. Sales were driven by strong volume growth in its key segments.
Company-wide gross margin rate (as adjusted) was 36.6% compared with 40% in the year-ago quarter.
The company’s results are driven by higher retailer support for its lawn and garden products and continued momentum in the Hawthorne segment.
Segment Details
In the second quarter, net sales in the U.S. Consumer division increased 23% year over year to $1,374 million. The segment reported profits of $435.9 million, up from a profit of $374.6 million in the prior-year quarter.
Net sales in the Hawthorne segment rose 66% year over year to $363.8 million in the reported quarter. The segment’s profits increased 74% year over year to $41.4 million.
Net sales in the Other segment increased 82% year over year to $91 million. The segment’s profits skyrocketed 340% year over year to $17.6 million.
Balance Sheet
At the end of second quarter, the company had cash and cash equivalents of $14.4 million, down 53.2% year over year. Long-term debt was $2,322.5 million, up 9.9% year over year.
Outlook
The company raised sales guidance in the Hawthorne segment for fiscal 2021 to 30-40% from 20-30% expected previously. U.S. Consumer sales growth guidance has been reaffirmed at 4-6%.
The gross margin rate is now projected to decline 175-225 basis points (bps) year over year.
The company noted that the margin pressure due to higher commodity and distribution costs is likely to continue in the third quarter, which is expected to be moderate in the fourth-quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Scotts has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Scotts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Scotts (SMG) Down 16.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Scotts Miracle-Gro (SMG - Free Report) . Shares have lost about 16.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Scotts Miracle-Gro Tops Q2 Earnings and Sales Estimates
Scotts Miracle-Gro reported net income from continuing operations of $311.1 million or $5.44 per share in second-quarter fiscal 2021 (ended Apr 3, 2021) compared with a net profit of $249.8 million or $4.43 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) were $5.64 per share, up 25.3% year over year. The figure topped the Zacks Consensus Estimate of $5.51.
Net sales rallied 32.3% year over year to $1,828.8 million and beat the consensus mark of $1,739.5 million. Sales were driven by strong volume growth in its key segments.
Company-wide gross margin rate (as adjusted) was 36.6% compared with 40% in the year-ago quarter.
The company’s results are driven by higher retailer support for its lawn and garden products and continued momentum in the Hawthorne segment.
Segment Details
In the second quarter, net sales in the U.S. Consumer division increased 23% year over year to $1,374 million. The segment reported profits of $435.9 million, up from a profit of $374.6 million in the prior-year quarter.
Net sales in the Hawthorne segment rose 66% year over year to $363.8 million in the reported quarter. The segment’s profits increased 74% year over year to $41.4 million.
Net sales in the Other segment increased 82% year over year to $91 million. The segment’s profits skyrocketed 340% year over year to $17.6 million.
Balance Sheet
At the end of second quarter, the company had cash and cash equivalents of $14.4 million, down 53.2% year over year. Long-term debt was $2,322.5 million, up 9.9% year over year.
Outlook
The company raised sales guidance in the Hawthorne segment for fiscal 2021 to 30-40% from 20-30% expected previously. U.S. Consumer sales growth guidance has been reaffirmed at 4-6%.
The gross margin rate is now projected to decline 175-225 basis points (bps) year over year.
The company noted that the margin pressure due to higher commodity and distribution costs is likely to continue in the third quarter, which is expected to be moderate in the fourth-quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Scotts has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Scotts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.