Last week, you might have seen that The Scotts Miracle-Gro Company (NYSE:SMG) released its annual result to the market. The early response was not positive, with shares down 2.6% to US$75.80 in the past week. Revenues came in at US$3.6b, in line with estimates, while Scotts Miracle-Gro reported a statutory loss of US$0.61 per share, well short of prior analyst forecasts for a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Scotts Miracle-Gro's eight analysts are forecasting 2025 revenues to be US$3.56b, approximately in line with the last 12 months. Scotts Miracle-Gro is also expected to turn profitable, with statutory earnings of US$3.27 per share. Before this earnings report, the analysts had been forecasting revenues of US$3.56b and earnings per share (EPS) of US$3.87 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 8.0% to US$81.71, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Scotts Miracle-Gro analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$70.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Scotts Miracle-Gro's past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2025. That would be a definite improvement, given that the past five years have seen revenue shrink 1.8% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.6% per year. Although Scotts Miracle-Gro's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Scotts Miracle-Gro. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Scotts Miracle-Gro's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Scotts Miracle-Gro going out to 2027, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Scotts Miracle-Gro (1 is potentially serious!) that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
