uploads///SMGs Historical and Estimated Sales

How Much Could Scotts Miracle-Gro Grow with Cannabis?

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Dec. 4 2020, Updated 10:53 a.m. ET

Revenue growth estimates

Earlier in this series, we saw the catalysts that have been driving Scotts Miracle-Gro (SMG) stock lately. In this part, we’ll see how those catalysts convert to the company’s revenue forecast.

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Sales growth

In fiscal 2016, Scotts Miracle-Gro sales fell 6.0% year-over-year. However, sales in fiscal 2017 are estimated at $3.0 billion, which would be a 7.0% rise from 2016.

For 2018, analysts are estimating $3.1 billion in sales, which would be a 4.0% rise year-over-year. In 2019, analysts estimate $3.2 billion in sales, or a 2.0% rise year-over-year. But you should take any estimates beyond 12 months with a grain of salt since uncertainty increases with time. Let’s look now at analysts’ revision history for sales.

Sales revision history

In the above graph, you can see the sales revision history for Scotts Miracle-Gro for the next three years. For that time period, sales have been revised upward after November 2016.

The above two graphs provide us with information on what analysts are estimating for growth through Scotts Miracle-Gro’s Project Focus, especially its recent acquisition to support the cannabis business. As of the date of this writing, the company’s sales are estimated to rise 7.0% over the next 12 months. But changes in legislation related to the use of cannabis or an increased interest in indoor or organics gardening could cause these estimates to change. These factors could also impact companies (XLB) such as Central Garden & Pet (CENT), Spectrum Brands Holdings (SPB), and Seaboard (SEB).

In the next part of this series, we’ll look at gross margins estimates for Scotts Miracle-Gro.

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