{ "@context": "https://frontierpicks.com/schemas/dossier.v1.json", "ticker": "SMG", "name": "The Scotts Miracle-Gro Company", "url": "https://frontierpicks.com/dossiers/SMG/", "json_url": "https://frontierpicks.com/dossiers/SMG.json", "status": "WATCHLIST", "current_conviction": "MEDIUM", "archetype": { "code": "a4", "n": 4 }, "current_thesis": "Scotts Miracle-Gro's margin recovery supports the shares modestly: fiscal 2027 guidance of $4.70 to $4.90 in adjusted earnings per share sits at or above the $4.71 consensus despite about $100 million of commodity inflation. The late-January 2027 report and spring retail sales settle whether the pricing plan holds.", "invalidation_trigger": "A daily close below $61.80, the 2026-11-03 close before the fiscal 2026 report, which would erase the results-day gain. A cut to the $4.70 to $4.90 fiscal 2027 adjusted earnings per share guidance would also end the case.", "catalyst_date": null, "pick": { "id": "P-2026-11-06-SMG", "conviction": "MEDIUM", "status": "open", "opened": "2026-11-06", "open_close": 64.71, "kill_level": 61.8, "kill_basis": "daily", "horizon_end": "2027-02-09", "last_date": "2026-11-06", "last_close": 64.71, "return_pct": 0, "spy_return_pct": 0, "excess_pp": 0, "kill_distance_pct": 4.708737864077661, "closed": null, "close_reason": null, "outcome": null, "scoreboard": "https://frontierpicks.com/track-record/" }, "themes": [ "consumer-discretionary-rotation" ], "tags": [], "sources": [], "notes": [ "The fiscal year ends September 30. The fiscal fourth quarter posted adjusted per-share losses of $1.97 in fiscal 2025 and $2.16 in fiscal 2026.", "Hawthorne is reported as a discontinued operation. Its North American divestiture closed on 2026-04-08, so continuing-operations figures exclude it.", "The company's 2026-11-04 release notes that sales are concentrated among a small number of retail customers." ], "source_links": [ { "title": "SCOTTS MIRACLE-GRO CO - Form 8-K - FY2026", "url": "https://www.sec.gov/Archives/edgar/data/0000825542/000082554226000061/exhibit991q4f26newsrelease.htm", "date": "2026-11-04" }, { "title": "Earnings call transcript: Scotts Miracle-Gro tops EPS view in Q4 2026, shares jump By Investing.com", "url": "https://www.investing.com/news/transcripts/earnings-call-transcript-scotts-miraclegro-tops-eps-view-in-q4-2026-shares-jump-93CH-5000079", "date": "2026-11-04" }, { "title": "SCOTTS MIRACLE-GRO CO - Form 8-K - FY2026", "url": "https://www.sec.gov/Archives/edgar/data/0000825542/000082554226000050/exhibit991smg2026-09x158xk.htm", "date": "2026-09-15" }, { "title": "Scotts Miracle-Gro (SMG) Q3 2026 Earnings Call Transcript", "url": "https://www.webull.com/news/15364422466888704", "date": null }, { "title": "Scotts Miracle-Gro (SMG) Q4 2026 Earnings Call Transcript", "url": "https://www.fool.com/earnings/call-transcripts/2026/11/04/scotts-miracle-gro-smg-q4-2026-earnings-call-transcript/", "date": "2026-11-04" } ], "body_markdown": "## Current Thesis\nScotts Miracle-Gro's margin recovery supports the shares modestly. Fiscal 2027 guidance of $4.70 to $4.90 in adjusted earnings per share (EPS) sits at or above the $4.71 consensus Benzinga reported on 2026-11-04, despite about $100 million of expected commodity inflation. The next quarterly report, estimated for late January 2027, and spring retail sales settle whether the pricing plan holds.\n\nThe company reported on 2026-11-04 that fiscal 2026 adjusted EPS rose 18% to $4.48, above its $4.30 to $4.45 guidance. Sales were the weak part: the fiscal fourth quarter fell 11% and missed estimates. This is an earnings and debt-reduction case built on price and cost. Consumer demand is not yet carrying it.\n\nSince selling its North American Hawthorne hydroponics business on 2026-04-08, the company reports almost entirely as a US consumer lawn and garden business. US Consumer was $3,017.6 million of $3,288.9 million in fiscal 2026 net sales, per the 2026-11-04 release.\n\n## Bull Case\n- **Guidance reached or beat consensus.** The company guided fiscal 2027 sales to $3.355 billion to $3.420 billion against a $3.361 billion estimate, and adjusted EPS to $4.70 to $4.90 against $4.71 (Benzinga, 2026-11-04).\n- **Margins widened in fiscal 2026.** Adjusted gross margin rose 80 basis points to 32.4%, per the 2026-11-04 release. Management expects further expansion in fiscal 2027, likely at the low end of its 50 to 100 basis point range (2026-11-04 call).\n- **Costs are locked earlier than usual.** About 55% of cost of goods sold is locked against a typical 40% at this point, with urea over 80% locked and diesel over 50% hedged (2026-11-04 call).\n- **Pricing and savings answer inflation.** Management plans an average price rise of about 4%, or about 2% after lost volume, plus at least $35 million of supply chain savings (2026-11-04 call).\n- **Cash flow is reducing debt.** Free cash flow was $278.4 million in fiscal 2026 and $250 million of 5.250% notes were redeemed on 2026-09-11. Net leverage, debt relative to earnings, improved 0.21 times to 3.89 times, with a 3.0 to 3.5 times target by fiscal 2029.\n- **Analysts raised targets after the report.** UBS's target went to $77 from $70 and Wells Fargo's to $76 from $71 on 2026-11-05. Wells Fargo had already raised from $60 to $71 on 2026-11-02.\n\n## Bear Case\n- **The fourth quarter missed on sales.** Sales of $302.9 million fell 11% and missed the $306.1 million estimate. The adjusted loss widened to $2.16 a share from $1.97, though it beat the $2.21 loss expected (2026-11-04 release; Benzinga).\n- **Operating earnings trailed the guidance.** Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2% to $579.9 million. The company had reaffirmed mid single-digit growth on 2026-09-15.\n- **Consumer takeaway is barely growing.** Branded point-of-sale (POS) dollars rose about 1% in fiscal 2026 and lawns fell 3%, per the 2026-11-04 call. E-commerce POS rose 24% and reached 13% of sales, which is the strong spot.\n- **Retailer inventory remains above last year.** The largest retailers ended fiscal 2026 up low single digits. Management plans a low single-digit sales headwind, and CEO Nate Baxter attributed about half of the inventory effect to slower takeaway (2026-11-04 call).\n- **Acquired sales support the growth guidance.** The $55 million Black Kow purchase, completed by 2026-10-29, adds 1% to 2% to fiscal 2027 sales growth against 2% to 4% guided. With about 2% net pricing as well, the guidance leaves little room for underlying unit growth, in this reading. Rising branded POS units in spring 2027 would disprove it.\n- **Growth is weighted to the second half.** Management expects first-half sales flat with last year (2026-11-04 call), so the guidance stays unproven through the coming winter.\n- **Debt still crowds out buybacks.** Only $25 million of the $500 million repurchase program has been used. Management calls further purchases opportunistic and secondary to debt reduction.\n\n## Setup & Price Structure\nThe shares closed at $61.80 on 2026-11-03 and were indicated up 9.68% at $67.78 before the open on 2026-11-04 (Investing.com). Adjusted daily closes show $66.38 on 2026-11-05, so part of the early jump has faded. That close is 8.7% below the 52-week high of $72.68 and 7.8% above its level three months ago.\n\nThe narrative is maturing: margin repair and debt reduction have been public since the April 2026 Hawthorne sale, and the 2026-11-04 report extended that story with a new year of guidance. UBS's $77 and Wells Fargo's $76 targets both sit above the 52-week high.\n\nCrowding evidence is limited to momentum. The 14-day relative strength index was 77.6 on 2026-11-05, above the 70 level commonly read as overbought. Share issuance is absent, since the company began repurchasing stock in August 2026. The earnings date has just passed, so no report is imminent.\n\n## Catalyst Calendar (next 30 days)\n- **~2026-11-30, est.:** The fiscal 2026 annual report on Form 10-K is expected. It would give fuller disclosure on customer concentration and the debt schedule. No company event inside the next 30 days has a confirmed date.\n- **~2027-01-27, est.:** Fiscal first-quarter results fall outside the 30-day window, and the company has not announced the date. The report is the first check on pricing and retailer inventory against the guidance.\n- **Spring 2027, no fixed date:** The lawn and garden season decides whether second-half growth arrives.\n\n## What Would Change Our Mind\nA cut to the $4.70 to $4.90 fiscal 2027 adjusted EPS range would break the case. So would a gross margin outlook that drops the expected expansion, because margin is what the earnings growth rests on.\n\nRetailer inventory falling below fiscal 2026 levels would also weaken it, since management assumes roughly flat inventory. A decline in branded POS dollars, or price rises costing more than the roughly half of the 4% increase management assumes, would point the same way. Commodity costs well beyond $100 million would add to the pressure.\n\nOn price, a daily close below $61.80, the close on 2026-11-03, would erase the gain made on the results. A close above the $72.68 52-week high, alongside rising POS units, would strengthen the case.\n\n## Correlation Notes\nThe shares sit in the consumer discretionary rotation group with names such as Portillo's, Planet Fitness, Wingstop and VF Corp. Attention on the group was accelerating in the latest weekly reading on 2026-11-06, after maturing readings on 2026-10-25 and 2026-11-01. The case rests on company guidance and does not depend on that group strength, though a cooling group would raise the bar for the shares.\n\nThe company-specific links run through urea and diesel, which management named as cost exposures on 2026-11-04, and through the purchasing decisions of a small number of large retail customers.", "first_seen": "2026-11-06", "last_analyzed": "2026-11-06T12:21:01+00:00", "last_synthesized": "2026-11-06", "last_update_source": "research_universe", "license": "Content © FrontierPicks. Cite the canonical URL." }