Scotts Miracle-Gro’s Gross Margins Will Likely Grow in 2Q17



Gross margins

Over the past 12 years, Scotts Miracle-Gro’s (SMG) gross margins have averaged ~35%. The company’s gross margins have been fairly stable in the past. Let’s look at what analysts estimate for the next four quarters.

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Analysts’ estimates

For the company’s upcoming 2Q17 earnings, analysts’ gross income estimates stood at $541 million—3.8% higher than $521 million in 2Q16. Gross margins on the company’s 2Q17 sales estimate of $1.2 billion would come in at 42%—unchanged from 2Q16.

For the next four quarters, analysts estimate gross income of $1.1 billion—about 6.5% higher than $1.2 billion in the last four quarters. Margins are estimated to expand slightly from 35.5% to 36% during the same period.

Scotts Miracle-Gro’s sales are estimated to grow 5.2% over the next four quarters. The gross income is estimated to grow 6.5%, which indicates that the company’s cost of goods will grow slower than sales growth to benefit margins.

Peers’ margins

Companies (MOO) such as Scotts Miracle-Gro, Central Garden & Pet (CENT), Spectrum Brands (SPB), and Agrium (AGU) are all in the race to improve their margins. Cental Garden & Pet is expected to report gross margins of 30%. Spectrum Brands is expected to report gross margins of 38%, while Agrium’s gross margins are estimated to stand at 25% over the next four quarters.


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