The Scotts Miracle-Gro Company
SMG
$69.30
-2.37%
The Scotts Miracle-Gro Company is the largest purveyor of home lawn and gardening products in the US, selling a broad range of lawncare products including grass seed, fertilizer, and weed, animal, and disease control under brands like Scotts, Miracle-Gro, Roundup, Ortho, and Tomcat. As a dominant market leader in the US consumer lawn and garden space, its products are featured at Home Depot and Lowe's, which together account for over half of revenue. The current investor narrative centers on the company's strategic refocus on its core consumer business following the divestiture of its Hawthorne Gardening Company segment, with attention on margin recovery and the potential for growth acceleration in the upcoming spring season.…
SMG
The Scotts Miracle-Gro Company
$69.30
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SMG 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on The Scotts Miracle-Gro Company's 12-month outlook, with a consensus price target around $74.17 and implied upside of +7.0% versus the current price.
Average Target
$74.17
0 analysts
Implied Upside
+7.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$67 - $80
Analyst target range
The stock is covered by 6 analysts, with a consensus recommendation of 'Buy' (mean recommendation of 1.875 on a 1-5 scale where 1 is Strong Buy). The average target price is $73.00, implying a modest 2.8% upside from the current price of $70.98. The distribution shows 4 Buy/Overweight ratings, 2 Neutral ratings, and no Sell ratings, indicating a generally bullish but cautious sentiment. The target range spans from a low of $63.00 to a high of $80.00. The high target of $80.00 assumes continued momentum in the core business and successful execution of the strategic refocus, while the low target of $63.00 factors in potential headwinds from seasonality or competitive pressures. Recent analyst actions include upgrades from Stifel (Buy from Hold in November 2025) and a downgrade from JP Morgan (Neutral from Overweight in March 2026), suggesting mixed sentiment. The spread between the low and high targets is $17.00 (27% of the low), indicating moderate uncertainty. Overall, the consensus leans bullish but with limited upside potential near term.
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Bulls vs Bears: SMG Investment Factors
SMG presents a mixed picture: the company benefits from a dominant market position, improving margins, and a strategic refocus on its core business after divesting Hawthorne. However, the balance sheet is highly leveraged with negative equity, and the stock trades at a premium valuation relative to peers. The bull case rests on continued margin recovery and successful execution of the core strategy, while the bear case centers on debt risk and seasonal earnings volatility. Currently, the evidence slightly favors the bulls given the margin improvement and strategic clarity, but the high debt and premium valuation temper enthusiasm. The single most important tension is whether the company can sustain its margin expansion and generate enough cash to reduce leverage, which would validate the current valuation.
Bullish
- Dominant Market Position: Scotts Miracle-Gro is the largest home lawn and gardening company in the US, with iconic brands like Scotts, Miracle-Gro, and Roundup. Over half of revenue comes from Home Depot and Lowe's, providing strong distribution and competitive moat.
- Margin Expansion in Core Business: Gross margin improved to 41.83% in Q2 2026 from 38.56% a year ago, driven by cost controls and pricing. Net margin also rose to 16.35% from 15.31%, indicating operational efficiency gains.
- Strategic Refocus After Hawthorne Divestiture: The sale of Hawthorne Gardening Company in April 2026 allows management to concentrate on the core US consumer segment, which generated 94% of Q2 revenue. This should improve capital allocation and reduce complexity.
- Strong Seasonal Cash Flow Generation: Free cash flow in Q2 2026 was $201.4 million, and trailing twelve-month FCF stands at $379.7 million. The company generates substantial cash during peak spring/summer quarters, supporting debt reduction and dividends.
Bearish
- High Debt and Negative Equity: Debt-to-equity ratio is -6.66 due to negative shareholders' equity, indicating a highly leveraged balance sheet. Debt ratio of 0.69 and interest expense of $31.3 million in Q2 2026 weigh on profitability.
- Seasonal Losses and Earnings Volatility: The company reported net losses of $125 million in Q1 2026 and $151.8 million in Q4 2025, highlighting extreme seasonality. Full-year profitability depends heavily on Q2 and Q3 performance.
- Premium Valuation vs. Peers: Trailing P/E of 22.6x is at a 51% premium to the Agricultural Inputs sector median of ~15x. This leaves little room for error if earnings disappoint.
- Customer Concentration Risk: Over half of revenue comes from Home Depot and Lowe's. Any loss of shelf space or change in retailer strategy could materially impact sales.
SMG Technical Analysis
The stock is in a recovery uptrend after a prolonged decline, with a 1-year price change of +5.17% and a year-to-date gain of +19.43%. The current price of $70.98 sits at 94.2% of its 52-week range (52-week low $52.00, high $75.34), indicating strong momentum near the upper end of the range. This positioning suggests the stock is benefiting from positive sentiment and could be approaching overbought territory, but also reflects a successful turnaround from the lows. Short-term momentum is accelerating sharply, with a 1-month price change of +13.19% and a 3-month change of +7.48%, outpacing the S&P 500's 1-month return of +0.31% and 3-month return of +4.67%. The relative strength index (RSI) is not provided, but the strong price action and volume of 1.8 million shares suggest robust buying interest. The divergence between the strong short-term momentum and the modest 1-year gain indicates that the recent rally may be a trend reversal rather than a mere pullback, as the stock has broken above its 2025 highs. Key support lies near the 52-week low of $52.00, while resistance is at the 52-week high of $75.34. A breakout above $75.34 would signal a continuation of the uptrend and potentially open the door to further gains, while a breakdown below $52.00 would negate the recovery. With a beta of 1.796, the stock is nearly 80% more volatile than the S&P 500, meaning it amplifies market moves and requires careful position sizing.
Beta
1.80
1.80x market volatility
Max Drawdown
-25.3%
Largest decline past year
52-Week Range
$52-$75
Price range past year
Annual Return
+3.9%
Cumulative gain past year
| Period | SMG Return | S&P 500 |
|---|---|---|
| 1m | +7.1% | -0.6% |
| 3m | +7.7% | +5.4% |
| 6m | +8.8% | +8.3% |
| 1y | +3.9% | +18.3% |
| ytd | +16.6% | +8.8% |
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SMG Fundamental Analysis
Revenue in the most recent quarter (Q2 2026, ended March 28, 2026) was $1.4595 billion, up 2.71% year-over-year from $1.421 billion in Q2 2025. The US Consumer segment generated $1.377 billion, accounting for 94% of total revenue, while other segments contributed $82.5 million. The growth trajectory is modest but positive, with the company benefiting from its core lawn and garden business. However, the seasonal nature of the business is evident: Q1 2026 revenue was only $354.4 million, highlighting the importance of the spring and summer quarters. The company is profitable, with net income of $238.6 million in Q2 2026 and a net margin of 16.35%, a significant improvement from the prior year's Q2 net margin of 15.31%. Gross margin expanded to 41.83% from 38.56% a year ago, driven by cost controls and pricing. However, the company reported losses in the off-season quarters (Q1 2026 net loss of $125 million, Q4 2025 net loss of $151.8 million), so profitability is highly seasonal. The balance sheet shows a debt-to-equity ratio of -6.66, which is negative due to negative shareholders' equity (common in highly leveraged companies). Free cash flow for the trailing twelve months is $379.7 million, but quarterly free cash flow was $201.4 million in Q2 2026, indicating strong cash generation during the peak season. The current ratio of 1.27 suggests adequate liquidity, but the high debt load (debt ratio of 0.69) and negative equity warrant caution. ROE is negative (-0.41) due to negative equity, but ROA is positive at 0.088.
Quarterly Revenue
$1.5B
2026-03
Revenue YoY Growth
+2.7%
YoY Comparison
Gross Margin
41.8%
Latest Quarter
Free Cash Flow
$379699999.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SMG Overvalued?
Since net income is positive (TTM net income of $238.6 million in the latest quarter), the primary valuation metric is the P/E ratio. The trailing P/E is 22.60x, while the forward P/E is 15.06x, implying the market expects earnings to grow significantly. The gap between trailing and forward P/E suggests that the market is pricing in a recovery in earnings, which is consistent with the company's seasonal profitability. Compared to the industry average (Agricultural Inputs), the stock's P/E of 22.6x is at a premium to the sector median of approximately 15x (based on available data), representing a 51% premium. This premium may be justified by the company's dominant market position and strong brand portfolio, but it also reflects high expectations. Historically, the stock's trailing P/E has ranged from as low as -44.7x (negative earnings) to as high as 20.1x in recent years. The current P/E of 22.6x is near the higher end of its historical range, suggesting that the market is pricing in optimistic future earnings. The P/S ratio of 0.96x is relatively low, indicating that the stock is not overvalued on a sales basis, but this is typical for a company with thin margins in off-season quarters.
PE
22.6x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 4x~12x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: SMG's balance sheet is a primary concern, with a debt-to-equity ratio of -6.66 and negative shareholders' equity, indicating that liabilities exceed assets. The debt ratio of 0.69 and interest expense of $31.3 million in Q2 2026 consume a significant portion of operating income. The company's earnings are highly seasonal, with net losses in Q1 and Q4, making it dependent on strong performance in the spring and summer quarters to generate full-year profits. Free cash flow of $379.7 million TTM provides some buffer, but the high leverage amplifies financial risk.
Market & Competitive Risks: The stock's beta of 1.796 makes it nearly 80% more volatile than the S&P 500, exposing it to macro downturns and sector rotation. The trailing P/E of 22.6x is at a premium to the industry average of ~15x, leaving it vulnerable to multiple compression if growth disappoints. Customer concentration with Home Depot and Lowe's (over 50% of revenue) poses a risk if these retailers reduce shelf space or face their own challenges. Recent news of the Hawthorne divestiture is positive, but execution risk remains.
Worst-Case Scenario: A severe recession could reduce consumer spending on lawn and garden products, leading to revenue declines and margin compression. Combined with high debt, this could force covenant violations or equity dilution. The realistic downside is to the 52-week low of $52.00, representing a -26.8% decline from the current price of $70.98. In a more extreme scenario, the stock could revisit its historical lows near $40, implying a -43.6% loss.
