Scotts Miracle-Gro To Post Q4 Earnings: What's In The Cards?

The Scotts Miracle-Gro Company (NYSE:SMG) is set to release fourth-quarter and fiscal 2019 results on Nov 6, before the opening bell. The Hawthorne segment’s fiscal fourth-quarter performance is likely to have benefited from the Sunlight Supply acquisition and higher promotional activities. Moreover, higher retail support might have made a positive impact on the U.S. Consumer segment.

The stock has rallied 47.6% in the past year against the industry’s 13.6% decline.

What to Expect in Fiscal 2019

In July, the company raised its fiscal 2019 guidance for the second time. It expects adjusted earnings per share (EPS) in the band $4.35-$4.50 compared with $4.20-$4.40 expected earlier.

The company revised guidance for sales growth to 16-17%. The projection assumes that sales in the Hawthorne unit are likely to increase around 90% year over year to $650 million. Also, sales in the U.S. Consumer segment are projected rise 6-7% in fiscal 2019. Earlier, the company had expected Hawthorne sales to increase 75-80%, while the same for U.S. Consumer segment was forecast to increase 3-4%.

Factors at Play in Q4

The U.S. Consumer unit’s performance in fiscal fourth quarter is likely to have benefited from strong consumer demand and higher retail support. The segment registered a 10% year over year growth in fiscal third quarter. The trend is likely to have continued in the quarter to be reported.

Hawthorne sales are mainly benefiting from the Sunlight Supply acquisition. The unit’s sales surged 138% year over year in the last reported quarter. The momentum is likely to show on the company’s upcoming quarterly results. Additionally, increased promotional activities might have made a positive impact on margins in the segment. However, it may be noted that the company expects a bit of slowdown in fiscal fourth quarter.

Q4 Estimates

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $451 million, which indicates a rise of 3.9% year over year.

The Zacks Consensus Estimate for fiscal fourth-quarter sales in the Hawthorne segment is currently pegged at $190 million, which suggests an increase of 25% from the year-ago quarter's reported figure.

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Scotts Miracle-Gro this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Scotts Miracle-Gro is 0.00%. The Most Accurate Estimate and the Zacks Consensus Estimate are both currently pegged at a loss of 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Scotts Miracle-Gro currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Franco-Nevada Corporation (TSX:FNV) has an Earnings ESP of +0.34% and sports a Zacks Rank #1.

Kinross Gold Corporation (NYSE:KGC) has an Earnings ESP of +2.50% and flaunts a Zacks Rank #1.

Arconic Inc (NYSE:ARNC) has an Earnings ESP of +1.42% and carries a Zacks Rank #3.

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