The Scotts Miracle-Gro Company (NYSE: SMG) Downgraded on Outlook
The Scotts Miracle-Gro Company (NYSE: SMG) Downgraded on Outlook
Today we have downgraded SMG to a sell as 2013 guidance was unimpressive considering the high multiples the company is already trading at now.
SMG is in a great sector but management needs to do more in terms of cost cutting and margins.
The Company said it expects company-wide net sales to increase by only 1 to 3 percent in fiscal 2013 on flat unit volume and improved pricing.
An anticipated but undefined promise of improvement in gross margin rate, along with leverage from SG&A, is expected to result in adjusted earnings per share from continuing operations in the range of $2.50 to $2.75 for fiscal 2013.
With more than two thirds of its commodity costs now locked for the year – including about 90 percent of urea – the Company said it expects approximately $20 million in commodity inflation in fiscal 2013, primarily due to higher-cost inventory carried into the fiscal year. Offsetting this headwind, the Company said it will increase prices in the low single digits and that it expects a benefit of approximately $15 to $20 million in savings related to its product cost-out initiatives.
Operating margin rate is expected to be in the range of 11 to 11.5 percent in fiscal 2013. Interest expense is forecast to be flat to modestly higher compared to fiscal 2012. The effective tax rate for the year is projected to be in a range of 36 to 37 percent.
The Company’s operating cash flow goal is expected to be at least $250 million in fiscal 2013.
Adding to the negative guidance Institutions have been exiting the stock
Growth for Scotts Miracle-Gro Co
1 Year |
3 Years |
5 Years |
|
|---|---|---|---|
Sales % |
0.94 |
0.96 |
-0.32 |
EPS % |
-13.74 |
-3.14 |
1.49 |
Dividend % |
16.67 |
34.81 |
-32.12 |
Institutional Holders
| % Shares Owned: | 70.50% |
| # of Holders: | 240 |
| Total Shares Held: | 43,258,295 |
| 3 Mo. Net Change: | 612,804 |
| # New Positions: | 32 |
| # Closed Positions: | 22 |
| # Increased Positions: | 96 |
| # Reduced Positions: | 115 |
| # Net Buyers: | -19 |
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Linda Johnson,
Business Development Director – Private Client Group,
Sales@Heffcap.com
Singapore
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
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