What happened

Scorched in August, shares of Scotts Miracle-Gro (SMG 7.53%) failed to grow back last month. According to data from S&P Global Market Intelligence, shares of Scotts Miracle-Gro fell 36% in September. In addition to sharing news of a shake-up in the C-suite, the company gave a more dour outlook for the remainder of 2022, and an analyst's bearish take on the stock motivated investors to exit their positions.

So what

The bad news for Scotts Miracle-Gro's shareholders arrived shortly before September began. On Aug. 31, the company had two announcements that shook the resolve of investors. First, it announced the departure of Cory Miller, the company's CFO, who served as the company's CFO for less than one year. Miller was replaced by David Evans, who has prior experience in the role, acting as the company's CFO from 2006 to 2013. Evans will serve as the company's CFO on an interim basis.

Scotts Miracle-Gro also announced that it foresees steeper cash outflow than it originally believed. Management projects the company will report negative free cash flow of $275 million to $325 million, notably lower than the original guidance of $150 million. According to the related press release, the new guidance "reflects a more accurate estimate of certain balance sheet items at the end of the current fiscal year, including a year-over-year decline in accounts payable that had not been fully factored in."

Despite the change in its free cash flow forecast, management reaffirmed its 2022 earnings-per-share forecast of $4 to $4.20.

One day after the company announced its personnel change and revised cash flow guidance, Wells Fargo re-evaluated its outlook on Scotts Miracle-Gro's stock. On Sept. 1, Chris Carey, an analyst at Wells Fargo, cut the price target to $75 from $85, maintaining an equal rating on the stock. Carey's rating implied upside of 12%, based on the stock's closing price of $66.95 on Aug. 31.

Now what

While the company announced the departure of its CFO, it also attempted to mitigate speculation that the move reflected deeper concerns about the company's finances. In the press release, Scotts Miracle-Gro asserted that "Miller's departure is not related to any disagreements regarding historical financial reporting, accounting, or legal matters."

There are many things that move investors to trim -- or exit -- their positions, but at the top of the list is uncertainty. The departure of the company's CFO, paired with the downward revision to the 2022 free cash flow forecast, clearly shook investors' confidence. Prospective investors may want to wait for some stability to return before placing this stock on their buy lists.