For many, a rather unconventional company that specializes in everything related to clients' gardens. The company takes care of lawns including many weeds, fertilizers and seeds. The shares quickly rose to new highs after the covid crash, but are trading much lower today. Is this company worth considering at all?

The company was founded, back in 1868. Its main products are fertilizers, seeds, weed killers and other products for gardeners, farmers and homeowners who care for their lawns and gardens.

Scotts Miracle-Gro is best known for its Scotts, Miracle-Gro and Ortho brands. The Scotts brand focuses on lawn products, while Miracle-Gro is known for its flower and plant fertilizers. Ortho, on the other hand, specializes in pesticides and other plant protection chemicals. The company also operates in the hydroponics growing segment through its subsidiary Hawthorne Gardening Company, which provides products and solutions for indoor (indoor) plant growing.

Scotts Miracle-Gro enjoys a strong market position not only in the U.S. but also globally.

Interesting factA: The company played an important role during World War II. During this time, it temporarily stopped producing fertilizers and instead became involved in the production of grass seeds for military use. These seeds were used to quickly restore lawns and soil on military bases around the world.

Sample hydroponic farm

Management

James Hagedorn - CEO

His father, Horace Hagedorn, launched the original Miracle-Gro in 1951.

A former fighter pilot known for his courage and ingenuity, Jim helped orchestrate Miracle-Gro's merger with Scotts in 1995 to create the world's leading lawn and garden company. He became CEO of the merged company in 2001 and was named Chairman of the Board in January 2003. He served as President from May 2001 to December 2005 and from November 2006 to October 2008, and resumed that role in October 2023.

Jim is a graduate of The Harvard Business School's Advanced Management Program and holds a degree in aviation from Embry Riddle Aeronautical University, where he is a member of the Board of Trustees.

Jim served in the United States Air Force for seven years where he was a Captain and an accomplished F-16 fighter pilot. Now he continues to be a fan of flying and spending time with his grandchildren. He is rarely seen without one of his beloved German Shepherds, either in the office or in the air.

Industry/Specialty

The company manages several brands, each specializing in a different type of garden care specific products associated with it.

Lawn Care: The Scotts brand is synonymous with lawn care. It offers a full line of products, including specialty fertilizers for different types of lawns, weed control products such as herbicides, and soil conditioners. In addition, Scotts provides grass seeds that are adapted to different climatic conditions and specific customer needs

Plant Protection: Ortho is a brand that specializes in plant protection through chemical products such as pesticides and herbicides. The product range includes products to control insects, slugs, weeds and other pests that can damage gardens and lawns. Ortho also offers natural-based products that are more environmentally friendly and safer for pets and children.

FertilizersA: The Miracle-Gro brand is one of the best known in the gardening industry and specializes in fertilizers that promote plant growth in gardens, balconies and homes. Its products include fertilizers for flowers, vegetables, trees and shrubs, both in traditional and organic form. The products are designed to provide optimum nutrition for different types of plants and soil conditions.

HydroponicsA: Hawthorne Gardening Company - This subsidiary is a leader in hydroponics, a method of growing plants without soil where nutrients are delivered directly through an aqueous solution. Hawthorne specializes in indoor growing products, which include lighting, climate control systems, various substrates, nutrients and other equipment needed to grow plants effectively indoors.

Company profitability and cash

The company $SMG, or its stock, hasn't really moved much in recent years. As such, it remains in a narrow sideways trend below $80 per share, which is where it got to thanks to a quick selloff in 2022. While recent results have pleased shareholders, the good vibes on the stock didn't last long. Let's dive more into the numbers.

The company's current market capitalization is $4.06 billion. This is where (thanks to the aforementioned sideways trend) the company has been for the past two years. However, it's down 72.26% since the peak. The stock is now trading at 2016 levels thanks to this price decline. The company now employs 5,500 people.

In terms of $SMGs stock split , an equal 75% of the company is owned by shareholders in the market. 25% of all shares ever issued, or 14.2 million shares, are held privately. The company's debt is now $2 billion and $790 million. That's more than 60% of its market value. Management has $279.9 million in cash on hand.

In 2019, the company's sales were $3.16 billion. Operating margins were 14.6%, bringing net income to $460 million. A year later, revenue increased to $4.13 billion. Profit margin was 9.38%, bringing net income to $387.4 million. Revenue growth still continued in 2021. Its value looked up to $4.92 billion. The margins increased to 10.41% and the company's profit rose to $512.5 million. In the last two years, revenue has only been declining. In 2022, revenue was $3.91 billion. The margins of $SMG went into the negative, specifically as high as -11.15%. In 2023, revenues were $3.55 billion. Margins were -10.7%. The company made $437 million and $380 million in those years.

The $SMGcompany has its business mainly focused on the United States. This state generated $3.21 billion in revenue for it in 2023. This is 90.38% of their total revenue. Other revenue, which the company categorizes as "international" was $341.8 million. The company's biggest revenue-generating category is serving customers in their backyards. That's taking care of their lawn, trees and irrigation. Hawtrone's business comes in second, earning it $467.3 million last year. Other additional revenue was $240.3 million.

In 2017, the company's earnings per share were $3.94. This was below estimates by 0.341%. In the following years, until 2021, the company was still below market estimates with EPS. In 2018, earnings per share were $3.71. However, in the next three years, their value increased very significantly. In 2019, it reached $4,478. The year 2020 delivered EPS of $7.24, and in 2021, when they peaked, earnings per share were at $9.23. But in the last two years, EPS for $SMG has been declining. First, it fell to $4.1 in 2022, and last year it hit $1.21. Last year, it beat the market consensus by 12.19%.

For revenue, we could see a very similar trend. Revenue was at $2.46 billion in 2017. The following year, revenue increased to $2.66 billion. So the increase was almost marginal. The next 3 years, similar to earnings per share, put the company at its peak. By 2021, sales managed to move up to $4.92 billion. In all three years, which were 2019,20 and 21, $SMG was able to get above the market consensus with revenue. First it was by 1.48%, then by 0.02% and lastly by 1.18%. However, in 2022 the trend reversed and revenue started to gradually shrink. The company missed market estimates by 0.74% that year. Revenues were up 3.92%. Last year, revenues were down to $3.55 billion.

Revenue $SMG from the largest segment was $2.16 billion in 2017. Over the years, they have climbed to their highest point, which was $3.2 billion in 2021. But last year, revenue from that part of the business was "only" at $2 billion and $840 million. Revenue from Hawthorne products was $287.2 million in 2017. Last year, that figure was nearly $200 million higher. So the company is still on a strong growth trend in its revenue in each sector.