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What's in Store for Scotts Miracle-Gro (SMG) in Q4 Earnings?

ScottsMiracle-Gro's (SMG) Q4 results are likely to reflect growth in Hawthorne business and higher costs.

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This story originally appeared on Zacks

The Scotts Miracle-Gro Company SMG is set to release fourth-quarter fiscal 2021 results on Nov 3, before the opening bell. Its fiscal fourth-quarter results are likely to reflect strength in Hawthorne business and higher costs.

- Zacks

ScottsMiracle-Gro beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while missing the same once. The company has a trailing four-quarter earnings surprise of 38.8%, on average. The company delivered an earnings surprise of 13.7% in the last reported quarter.

Shares of ScottsMiracle-Gro have declined 4.4% in the past year compared with 64.3% rise of the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Let’s see how things have shaped up for this announcement.

What Do the Estimates Indicate?

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $716 million, indicating a 19.5% decline from the prior-year quarter’s level.

The Zacks Consensus Estimate for fiscal fourth-quarter sales of the U.S. Consumer segment is currently pegged at $276 million, which implies a 44.5% decline from the year-ago quarter's reported figure.

The Zacks Consensus Estimate for fiscal fourth-quarter sales of the Hawthorne segment is currently pegged at $399 million, which indicates a 13.3% rise from the year-ago quarter's reported figure.

Factors at Play

Hawthorne’s fourth-quarter performance is likely to have benefited from strong growth across the product categories, especially hydroponic lighting in North America. It is also likely to have gained from cost savings in the quarter.

However, the company is expected to have been impacted by high marketing expenses in the quarter. High commodity costs might also have put pressure on margins.

It has also been witnessing headwinds in the U.S. Consumer division, which are likely to hurt the company’s results.

Zacks Model

Our proven model does not conclusively predict an earnings beat for ScottsMiracle-Gro this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for ScottsMiracle-Gro is 0.00%. The Zacks Consensus Estimate is currently pegged at a loss of 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ScottsMiracle-Gro currently carries a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

B2 Gold Corp. BTG, scheduled to release earnings on Nov 2, has an Earnings ESP of +0.53% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company CC, scheduled to release earnings on Nov 4, has an Earnings ESP of +1.26% and carries a Zacks Rank #2.

Albemarle Corporation ALB, scheduled to release earnings on Nov 3, has an Earnings ESP of +8.73% and carries a Zacks Rank #3.



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