One of the better sources of growth in the stock market on Thursday could be found with Scotts Miracle-Gro (NYSE: SMG) shares. The veteran gardening supplies company enjoyed an 11% surge across the trading session, after it reiterated its bullish guidance for the entirety of its fiscal 2025. And that was on a generally bearish day for the market as a whole, as the S&P 500 (SNPINDEX: ^GSPC) landed in negative territory with a 0.5% dip.
Guidance reiterated
Before the market open, Scotts felt compelled to update investors on its projections for the fiscal year. The company is sticking to its existing forecasts, which are counting on U.S. consumer net sales growing at a low-single-digit percentage rate compared to fiscal 2024,with non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) coming in at $570 million to $590 million. The company has not provided net income guidance.
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That contrasts favorably with the average consensus analyst estimate. Collectively, prognosticators tracking Scotts stock are anticipating a single-digit percentage decline in revenue for fiscal 2025. They are modeling $3.44 billion, a figure that’s more than 3% below the previous year’s result.
Scotts is generally more on investor radars at this time of the year because we’re in growing season, the period where individual and institutional growers alike do much of their planting. The company quoted CEO Jim Hagedorn as saying, “With the peak lawn and garden season upon us, we continue to drive positive outcomes on multiple fronts, a reflection of the health of our consumer, coupled with the power of our incremental marketing investments and retailer promotional programs.”
Appealing for some investors
While it’s encouraging that Scotts management continues to stand by its revenue growth projections, to me that’s not enough to get excited about the stock. This is essentially a slow-growing, mature business at its core that pays an attractive dividend yielding 4.1% at present. To my mind, that makes it something of an income stock play, but I wouldn’t count on great leaps in the fundamentals.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Scotts Miracle-Gro. The Motley Fool has a disclosure policy.
