uploads///SMGs Historical and Estimated EBITDA and Margin

Takeaways from Scotts Miracle-Gro’s EBITDA Estimates

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Mar. 15 2017, Updated 7:36 a.m. ET

EBITDA estimates

Scotts Miracle-Gro’s (SMG) bold foray into hydroponics and organics is expected to trickle down to the company’s EBITDA (earnings before interest, tax, depreciation, and amortization). That could help it release some steam from its affirmative covenants on its credit facility.

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EBITDA estimates

In 2017, EBITDA income is estimated at $569.0 million. On a revenue estimate of $3.0 billion, that would translate to an EBITDA margin rate of 18.8%. That would compare to 18.2% in 2016 and an average of 15.9% in the past three years.

For fiscal 2018 and fiscal 2019, Wall Street analysts estimate SMG’s margins to expand further. They expect margins to expand to 19.0% in 2018 and 20.2% in 2019. Analysts expect SMG’s EBITDA margins to expand faster than its gross margins in 2019.

Analyst revisions

Much like the revisions in sales and gross margins, analysts have revised their EBITDA margin estimates upward for SMG after April 2016. EBITDA margins in the above graph are well above the past three-year average. The upward revision came right after the company announced Project Focus, which we looked at in the earlier parts of this series.

Much of this expansion will come from SMG’s core market (MOO), the United States, where Central Garden & Pet (CENT), Spectrum Brands (SPB), and Seaboard (SEB) are also present.

In the next part, we’ll look at SMG’s EPS (earnings per share) estimates and revisions.

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