The Scotts Miracle-Gro Company (SMG)

The Scotts Miracle-Gro Company (SMG) Materials & Commodity Exposure

The Scotts Miracle-Gro Company (SMG) is a major player in the lawn and garden care industry, offering a diverse portfolio of branded products. Its Hawthorne segment caters to the rapidly growing hydroponics market, positioning the company at the intersection of traditional gardening and innovative cultivation technologies.

What Is the Investment Thesis for SMG?

The Scotts Miracle-Gro Company presents a mixed investment thesis. The company's established position in the U.S. consumer lawn and garden market provides a stable revenue base, supported by strong brand recognition and a wide distribution network. The dividend yield of 4.32% offers an attractive income stream for investors. However, the company's high beta of 1.92 indicates significant volatility. The P/E ratio of 33.1 suggests a premium valuation compared to the broader market. Growth in the Hawthorne segment, driven by the expanding hydroponics market, is a key catalyst. Investors should monitor the company's ability to manage costs and maintain profitability in a competitive environment.

Based on FMP financials and quantitative analysis

SMG Key Highlights

• Market Cap of $3.88B reflects its significant presence in the agricultural inputs market.
• P/E ratio of 33.1 indicates investor expectations for future earnings growth.
• Profit Margin of 3.3% demonstrates opportunities for operational efficiency improvements.
• Gross Margin of 32.5% highlights the value of SMG's branded products.
• Dividend Yield of 4.32% provides an attractive income component for investors.

Who Are SMG's Competitors?

SMG is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are SMG's Key Strengths?

• Strong brand recognition and customer loyalty.
• Extensive distribution network.
• Leading position in the U.S. consumer lawn and garden market.
• Growing presence in the hydroponics market.

What Are SMG's Weaknesses?

• Dependence on weather patterns and seasonal demand.
• Exposure to commodity price fluctuations.
• High beta indicates significant volatility.
• Relatively low profit margin compared to some competitors.

What Could Drive SMG Stock Higher?

• Continued growth in the Hawthorne segment driven by the expanding hydroponics market.
• Potential regulatory changes in the cannabis cultivation market.
• Product innovation and development of sustainable solutions.
• Expansion of e-commerce channels and online sales.

What Are the Key Risks for SMG?

• Negative return on equity (-33.7%) — the business is not currently generating profit on shareholder capital.
• Rich valuation — a P/E of 33.1 runs well above the Basic Materials sector’s ~22x, leaving little room for a miss.
• Economic downturns affecting consumer spending on lawn and garden care products.
• Increasing competition from private-label brands and other competitors.
• Weather-related events impacting demand for lawn and garden products.
• Fluctuations in commodity prices affecting input costs.

What Are the Growth Opportunities for SMG?

• Expansion of the Hawthorne Segment: The market for hydroponic and indoor gardening products is experiencing rapid growth, driven by increasing interest in controlled environment agriculture and cannabis cultivation. Scotts Miracle-Gro's Hawthorne segment is well-positioned to capitalize on this trend by offering a comprehensive range of products, including lighting systems, nutrients, and growing media. The global hydroponics market is projected to reach billions of dollars in the coming years, presenting a significant growth opportunity for the company.
• Product Innovation and Development: Investing in research and development to create new and improved lawn and garden care products can drive revenue growth and enhance brand loyalty. Scotts Miracle-Gro can focus on developing environmentally friendly and sustainable products to appeal to environmentally conscious consumers. This includes organic fertilizers, natural pest control solutions, and water-saving technologies. Innovation in product formulations and delivery methods can provide a competitive edge and attract new customers.
• E-commerce Expansion: Growing online presence and sales through e-commerce platforms can reach a broader customer base and increase revenue. Scotts Miracle-Gro can invest in its online marketing efforts, improve its e-commerce website, and partner with online retailers to expand its reach. The increasing trend of online shopping for lawn and garden products presents a significant opportunity for the company to grow its sales and market share.
• Geographic Expansion: Expanding into new geographic markets can drive revenue growth and diversify the company's operations. Scotts Miracle-Gro can target emerging markets with growing populations and increasing disposable incomes. This includes countries in Asia, Latin America, and Africa. Adapting its product offerings to meet the specific needs and preferences of consumers in these markets is crucial for success.
• Strategic Acquisitions: Acquiring complementary businesses can expand the company's product portfolio, increase its market share, and enhance its competitive position. Scotts Miracle-Gro can target companies in the lawn and garden care industry, as well as companies in related industries such as landscaping and irrigation. Strategic acquisitions can provide access to new technologies, distribution channels, and customer segments.

What Opportunities Does SMG Have?

• Expansion into new geographic markets.
• Product innovation and development of sustainable solutions.
• Growth in the hydroponics market.
• Strategic acquisitions to expand product portfolio.

What Threats Does SMG Face?

• Increasing competition from private-label brands.
• Regulatory uncertainties in the cannabis cultivation market.
• Economic downturns affecting consumer spending.
• Environmental concerns and regulations.

What Are SMG's Competitive Advantages?

• Strong brand recognition with well-known brands like Scotts and Miracle-Gro.
• Extensive distribution network through various retail channels.
• Established presence in the hydroponics market through the Hawthorne segment.
• Proprietary product formulations and technologies.

What Does SMG Do?

Founded in 1868 and headquartered in Marysville, Ohio, The Scotts Miracle-Gro Company has evolved from a small seed business into a global leader in the lawn and garden care industry. The company operates through three segments: U.S. Consumer, Hawthorne, and Other. The U.S. Consumer segment offers a wide array of products, including lawn fertilizers, grass seed, spreaders, and pest control solutions under well-known brands like Scotts, Turf Builder, and Miracle-Gro. The Hawthorne segment focuses on the hydroponic gardening market, providing lighting, nutrients, and other essential products for indoor plant cultivation. This segment has grown significantly with the increasing interest in controlled environment agriculture. The 'Other' segment includes the company's non-core businesses. Scotts Miracle-Gro distributes its products through various channels, including home centers, mass merchandisers, hardware stores, nurseries, garden centers, and e-commerce platforms, ensuring broad market access. The company's long history and brand recognition have established a strong competitive position in the consumer lawn and garden market.

What Products and Services Does SMG Offer?

• Manufactures and markets lawn care products, including fertilizers and grass seeds.
• Offers gardening and landscape products like plant foods and potting mixes.
• Provides hydroponic products for indoor gardening.
• Sells pest and disease control products for lawns and gardens.
• Offers weed control products for home areas.
• Distributes products through various retail channels, including home centers and e-commerce platforms.

How Does SMG Make Money?

• Manufacturing and selling branded lawn and garden care products.
• Providing hydroponic gardening solutions through the Hawthorne segment.
• Generating revenue through retail sales and distribution partnerships.
• Investing in research and development to innovate new products.

What Industry Does SMG Operate In?

The Scotts Miracle-Gro Company operates in the agricultural inputs industry, which is influenced by factors such as weather patterns, consumer spending on home and garden improvements, and the increasing adoption of hydroponic gardening techniques. The industry is competitive, with companies like AVNT: Avient Corporation vying for market share. The global lawn and garden care market is estimated to be worth billions of dollars annually, with a steady growth rate driven by urbanization and increasing disposable incomes. Scotts Miracle-Gro's Hawthorne segment benefits from the expanding cannabis cultivation market, although regulatory uncertainties remain a factor.

Who Are SMG's Key Customers?

• Homeowners who maintain lawns and gardens.
• Professional landscapers and gardening services.
• Commercial growers and hydroponic farmers.
• Retailers, including home centers, mass merchandisers, and garden centers.

ROE -34%Key Financial Metrics

Return on equity for The Scotts Miracle-Gro Company stands at -33.7%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 3.3%, showing how much profit it generates from its asset base. SMG trades at a trailing price-to-earnings ratio of 33.09, above the Basic Materials sector average of ~22x. Its free cash flow yield is 9.5%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.27 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 2.8%, the inverse of the P/E and a quick read on earnings relative to price.

How The Scotts Miracle-Gro Company Is Valued

The Scotts Miracle-Gro Company carries a market capitalization of $3.88B, placing it in the mid-cap category. Relative to its peer group, SMG's quantitative score of 63/100 is roughly in line with the peer average of 62/100.

F-Score 7/9Financial Health

The Scotts Miracle-Gro Company's Piotroski F-Score is 7/9, a 9-point checklist of profitability, leverage and efficiency — signaling solid underlying fundamentals. Its Altman Z-Score of 2.32 places it in the grey zone, a middle ground that warrants monitoring.

FY2026 estForward Outlook

Wall Street analysts project The Scotts Miracle-Gro Company revenue of about $3.33B for fiscal 2026, with EPS near $4.35. The estimate reflects 6 contributing analysts.

Net buyingInsider Activity

Over the past six months, The Scotts Miracle-Gro Company insiders filed 30 SEC Form 4 transactions — 1 sales and 29 purchases. On net that is roughly 1K shares acquired (about $365K) — insiders putting money in tends to read as conviction.

SMG Financials

SMG Latest News

SMG Analyst Consensus

SMG MoonshotScore

What Investors Ask About The Scotts Miracle-Gro Company (SMG) — Basic Materials

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

Official Resources