How ScottsMiracle-Gro Is Shaping Up after the Cannabis Boom

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Jul. 1 2019, Updated 9:57 a.m. ET

SMG’s performance

Almost a year ago, ScottsMiracle-Gro (SMG) was one of the hottest cannabis stocks, with many investors hoping for windfall gains. However, things didn’t go as they may have liked.

ScottsMiracle-Gro stock fell 36% last year, while other cannabis stocks delivered healthy returns. For example, Canopy Growth (WEED)(CGC) rose ~23%, and Cronos Group (CRON) rose ~33%.

However, it’s worth noting that ScottsMiracle-Gro does not cultivate cannabis like the other companies—it supplies cannabis-growing items such as hydroponic products used for indoor gardening. ScottsMiracle-Gro also missed its targets because it was betting heavily upon California’s market, which has continued to face regulatory delays.

This year, ScottsMiracle-Gro stock has turned around, rising ~57% in the first six months. It beat Canopy Growth, which has risen 42%, and Cronos Group, which has risen 53%. In contrast, Tilray (TLRY) has fallen ~33%.

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Guidance revision

ScottsMiracle-Gro revised its sales outlook in early June and now expects company-wide sales growth of 13%–14% YoY (year-over-year). Hawthorne, SMG’s cannabis segment, is expected to grow 75%–80% YoY.

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