Scotts Miracle-Gro: Analyst Recommendations and Target Prices

In this series, we’ve seen how Scotts Miracle-Gro (SMG) took a turn in 2016 and lifted investors’ enthusiasm. That drove the stock to a ~52.5% total return in 2016. We saw that analysts have also done their part by adjusting the company’s expected future opportunities to higher sales, margins, and EPS estimates.

In this final part of the series, we’ll take a look at analysts’ recommendations and price targets for SMG for the next 12 months.

In the above graph, you can see that analyst recommendations have trended with earnings estimates, with more analysts recommending a “buy” for the stock. Currently, two analysts have given the stock a “strong buy” rating, three have recommended a “buy,” and five have recommended a “hold” for the next 12 months.

In November 2016, one analyst had a “sell” recommendation for the stock. Now, none of the analysts have recommended a “sell.”

For the next 12 months, the consensus price target for Scotts Miracle-Gro is $99.30 per share. The stock was trading at $90.60 on March 3, 2017. That leaves a return potential of 9.6% if we take the analyst price target as an accurate measure of SMG’s value per share.

Scotts Miracle-Gro’s expectations for future growth hinge largely on how regulations for the cannabis industry play out in the United States. There are mixed signals about how the Trump administration will impact this industry. In a recent February 23, 2017, press release, White House press secretary Sean Spicer drew a clear line between medical and recreational marijuana. The Trump administration seems to favor medical marijuana, but it’s a wait-and-watch situation.

That may explain why Scotts Miracle-Gro is trading at a discount to analysts’ next 12-month consensus price target.

For more on SMG’s peers (SOIL) such as Agrium (AGU), Central Garden & Pet (CENT), and PotashCorp (POT), be sure to visit our Agricultural Fertilizers page.