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Why Scotts Miracle-Gro Stock Gained 14% in July

By Demitri Kalogeropoulos - Aug 7, 2019 at 10:30AM

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The lawn care specialist boosted its 2019 outlook last month.

What happened

Lawn and garden product specialist Scotts Miracle-Gro (SMG -0.38%) beat the market last month by gaining 14% compared to a 1% uptick in the S&P 500, according to S&P Global Market Intelligence. The rally added to significant gains for shareholders, who are up over 70% so far in 2019.

A woman watering flowers in her garden

Image source: Getty Images.

So what

July's stock price bump came in the month's final few days as investors reacted to a surprisingly strong second-quarter earnings report. Scotts Miracle-Gro said on July 31 that sales gains cracked into the double-digits with help from booming demand in its hydroponic Hawthorne franchise. The company also reached a profit-sharing deal with Monsanto on the Roundup weed control brand.

Now what

Scotts Miracle-Gro lifted its sales and earnings outlooks to account for the improved expansion pace in 2019's first half. Revenue is now expected to rise by between 16% and 17%, including an almost 7% boost in the core business and a near doubling of Hawthorne sales. The predicted 2019 earnings range moved up from between $4.20 and $4.40 per share to between $4.35 and $4.50 per share.

Gross profit margin is trending slightly lower, and that trend is worth watching over the next few months for signs that the company's aggressive promotions continue to deliver healthy market share gains.

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The Scotts Miracle-Gro Company Stock Quote
The Scotts Miracle-Gro Company
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