Shares of The Scotts Miracle-Gro Company SMG scaled a fresh 52-week high of $171.19 on Aug 20, before closing the session at $170.60.

The company has a market cap of around $9.5 billion. Average volume of shares traded in the past three months was around 412K.  

The stock has rallied 56.6% in the past year against the industry’s 8.4% decline.

What’s Driving SMG?

Solid fiscal third-quarter performance, upbeat view and bright prospects in the Hawthorne unit are major factors driving the company’s shares.

Scotts Miracle-Gro’s adjusted earnings per share (EPS) rose 22% year over year in third-quarter fiscal 2020 (ended Jun 27, 2020) to $3.80. The figure beat the Zacks Consensus Estimate of $3.35.  

Also, net sales rose 27.6% year over year to $1,492.7 million and beat the consensus mark of $1,323.6 million.

In July, the company revised its sales growth outlook for fiscal 2020.

In the U.S. Consumer unit, the company projects sales growth of 20-22% for the fiscal compared with 9-11% expected earlier. It now expects sales in the Hawthorne segment to rise 55-60% in fiscal 2020 compared with the previous expectation of 45-50%.

Based on these assumptions, Scotts Miracle-Gro now projects adjusted EPS between $6.65 and $6.85 compared with $5.65-$5.85 expected earlier. Adjusted free cash flow is expected to be around $400 million, up from the earlier projection of nearly $350 million.

Moreover, earnings estimate revisions have greatest impact on stock prices. The Zacks Consensus Estimate for Scotts Miracle-Gro’s fiscal fourth-quarter earnings moved up 58.2% in the past month. Further, the company’s earnings for fiscal 2020 are currently pegged at $6.82 per share, which suggests year-over-year growth of 52.6%.

Zacks Rank & Other Key Picks

Scotts Miracle-Gro currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space include Golden Star Resources Ltd. GSS, Eldorado Gold Corporation EGO and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Golden Star Resources has an expected earnings growth rate of 12.5% for 2020. The company’s shares have surged 63.4% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 33.1% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 84.8% in the past year.

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