Please ensure Javascript is enabled for purposes of website accessibility

Why Scotts Miracle-Gro Stock Gained 16% in January

By Demitri Kalogeropoulos - Updated Feb 10, 2020 at 9:16AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The lawn care specialist is seeing solid growth in its consumer and hydroponic business segments.

What happened

Scotts Miracle-Gro (SMG 3.32%) stock shareholders beat the market last month as their investment gained 16% compared to a roughly flat result for the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally added to healthy returns for the lawn and garden care specialist, given that shares more than doubled the S&P's 30% return in 2019.

A manicured lawn.

Image source: Getty Images.

So what

January's spike was powered by the company's announcement of surprisingly strong first-quarter results. On Jan. 29, Scotts revealed that sales jumped 23%, in fact. Most of that increase came from its cannabis-leveraged Hawthorne brand, but management also noted strength in its consumer segment during a traditionally weak season for lawn and garden care.

Now what

Scotts Miracle-Gro is on track to generate sales growth of between 4% and 6% this year as gains from recent acquisitions slow over the next few quarters. Yet with margins rising thanks to rising prices and increased production efficiencies, shareholders are hoping to see faster adjusted earnings growth as non-GAAP (adjusted) profits improve to between $4.95 per share and $5.15 per share from $4.47 per share in 2019.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Scotts Miracle-Gro Company Stock Quote
The Scotts Miracle-Gro Company
SMG
$93.26 (3.32%) $3.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.