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.
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.
