Scotts Miracle-Gro (SMG) will announce its fiscal 2Q18 earnings before markets open on May 1. The mean EPS (earnings per share) estimate is $3.38, which is a 21% increase compared to EPS of $2.8 in 2Q17.
The company’s stock had a good run in 2017 increasing by almost 14.5% during the year. However, the company’s stock is trading almost 22% lower YTD (year-to-date). For the next four quarters, the company is expected to report EPS of $4.51, which would be an increase of 11% year-over-year from $4.1 in the last four quarters.
What to look for in the results
Investors will pay close attention to Scotts Miracle-Gro Company’s progress in its indoor gardening segment, Hawthorne. The Hawthorne segment is primarily focused on the emerging cannabis sector (HMMJ), which has given SMG stock a boost in the last two years.
Over the past two years, Scotts Miracle-Gro has made several acquisitions under the umbrella of Hawthorne, which serves the indoor gardening market. However, the company’s 1Q18 earnings disappointed investors, as Hawthorne segment sales excluding acquisitions fell year-over-year.
To make matters worse, the company’s chair and CEO, James Hagedorn, added that he doesn’t expect to see a 10% increase in volumes for the Hawthorne segment as the company predicted earlier. Read more in Why Scotts Miracle-Gro Stock Fell 14% on January 30. Market Realist will publish an update following the company’s earnings.
Cannabis players such as Canopy Growth (WEED), Aurora Cannabis (ACB) (ACBFF), and MedReleaf (MEDFF) have also had YTD losses. For a comparison of cannabis players’ valuation multiples, read Revisiting Valuation Multiples for Cannabis Companies.