Scotts Miracle Gro (SMG) Could Be 18% Undervalued As SMG 2.0 Takes Shape
Scotts Miracle-Gro (SMG) is drawing fresh attention after outlining its multi-year SMG 2.0 plan, along with updated earnings guidance, mid-term financial targets, and a recently affirmed cash dividend.
See our latest analysis for Scotts Miracle-Gro.
The share price reaction to Scotts Miracle-Gro's SMG 2.0 update and guidance has been negative in the very short term, with the 1 day share price return down 6.15% and the 7 day share price return down 9.15%. However, the 1 year total shareholder return of 8.15% and 3 year total shareholder return of 33.94% show that longer term holders have still seen gains, even though the 5 year total shareholder return is down 52.66%.
If the SMG 2.0 plan has you thinking about where else growth or change might be taking shape, this could be a good moment to check out 22 top founder-led companies
Scotts Miracle-Gro now has a clearer story and a detailed SMG 2.0 roadmap. After the recent share price drop, the key question is whether that strong garden franchise is being offered at an appealing price today.
Most Popular Narrative: 17.8% Undervalued
Scotts Miracle-Gro's most followed narrative pegs fair value at $75.50, compared with the last close at $62.06. That gap hinges on a detailed earnings and margin story.
Digital transformation, rapid e-commerce expansion, and increased influencer/digital advertising (including social and streaming channels popular with millennials/gen Z) are deepening customer engagement, enabling new direct-to-consumer channels, and positioning the company for sustainable higher-margin sales and gross margin expansion over the next several years.
Want to see what this narrative is really baking in for Scotts Miracle-Gro? The whole valuation leans on a profit rebuild, steadier margins, and a reset earnings base that has been fully re-modeled behind the scenes.
Result: Fair Value of $75.50 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this Scotts Miracle-Gro narrative can be knocked off course if tighter environmental rules curb demand for traditional products, or if weather volatility disrupts expected sales patterns.
Find out about the key risks to this Scotts Miracle-Gro narrative.
Another View on Scotts Miracle-Gro's Valuation
That 17.8% undervalued fair value of $75.50 rests on earnings and margin assumptions. The current P/E of 24.8x is above the peer average of 7.3x and also above a fair ratio of 20.2x. This suggests investors are already paying up and valuation risk cuts both ways.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
If this mixed picture on Scotts Miracle-Gro leaves you on the fence, review the details while they are fresh and evaluate the company’s risk and reward balance for yourself with 3 key rewards and 3 important warning signs
Looking for more investment ideas beyond Scotts Miracle-Gro?
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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.
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