What to Expect from Scotts Miracle-Gro’s Margins in 2Q17

Earlier in this series, we discussed sales and gross income growth estimates for Scotts Miracle-Gro (SMG). Specifically, we saw how the gross income is estimated to grow faster at 6.5% compared to sales growth of 5.2% over the next four quarters including 2Q17.

For its upcoming 2Q17 earnings, the EBITDA (earnings before interest, tax, depreciation, and amortization) is estimated to come in at $336 million—flat compared to 2Q16. However, the EBITDA margins are estimated to fall from 27% to 26.3% YoY (year-over-year).

Central Garden & Pet’s (CENT), Scotts Miracle-Gro’s peer (IYM), margins are estimated to fall slightly from 12.7% to 12.2%. Agrium’s (AGU) estimated margins in the upcoming quarter are also expected to fall from 7.1% to 6.8%. Spectrum Brands’ (SPB) margins are estimated to remain unchanged at 19% YoY.

The situation isn’t expected to change in the next four quarters. The EBITDA is estimated to stand at $556 million—up 3.6% from $537 million in the last four quarters. Compared to growth in gross income for the next four quarters, the estimate shows an uptick in the operating expense.

Next, we’ll discuss earnings estimates for Scotts Miracle-Gro.