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Scotts Miracle-Gro (SMG) Q3 Earnings Top, Sales Lag Estimates

The Scotts Miracle-Gro CompanySMG recorded net income from continuing operations of $125.5 million or $2.23 per share in third-quarter fiscal 2018 (ended Jun 30, 2018), down from $144.6 million or $2.41 a year ago.

Barring one-time items, adjusted earnings came in at $2.67 per share in the quarter, which surpassed the Zacks Consensus Estimate of $2.55.

Sales rose roughly 2% year over year to $994.6 million. However, the figure trailed the Zacks Consensus Estimate of $996.4 million.

Company-wide adjusted gross margin rate declined to 36.1% from 39.4% a year ago, mainly due to commodity inflation, higher-than-expected distribution costs, product mix related to acquisitions and increased trade program expenses.

Scotts Miracle-Gro Company (The) Price, Consensus and EPS Surprise

Scotts Miracle-Gro Company (The) Price, Consensus and EPS Surprise | Scotts Miracle-Gro Company (The) Quote

Segment Review

In the fiscal third quarter, sales from the U.S. Consumer division rose roughly 1% year over year to $810.9 million, while profitability decreased 1% to $243.1 million.

Sales from the Hawthorne segment were up around 2% to $74.2 million in the quarter. The segment incurred net loss of $3.6 million against net profit of $10.3 million a year ago. Notably, Hawthorne sales declined 37% in the quarter, excluding the contributions from acquisitions.

Sales from the company's Other segment rose 10% to $109.5 million while profitability increased 2% to $13.1 million.

Balance Sheet

Scotts Miracle-Gro ended the quarter with cash and cash equivalents of $29.6 million, down around 66.3% year over year. Long-term debt was $1,975.4 million, up roughly 40%.

Outlook

The company reiterated its prior guidance for fiscal 2018. It continues to expect sales growth in the range of 0-2% year over year, which includes impact of acquisitions. Adjusted earnings per share are anticipated to be in the $3.70-$3.90 band.

Price Performance

Shares of Scotts Miracle-Gro have declined 3.3% over the past three months against the industry 's 14% rise.

Zacks Rank & Stocks to Consider

Scotts Miracle-Gro currently has a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the basic materials space are KMG Chemicals, Inc KMG , CF Industries Holdings, Inc. CF and Celanese Corporation CE , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 40.2% in a year.

CF Industries has an expected long-term earnings growth rate of 6%. Its shares have rallied 53.7% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 17.3% in a year.

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Scotts Miracle-Gro Company (The) (SMG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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