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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Scotts Miracle-Gro Company (XNYS:SMG) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SMG
Name:
THE SCOTTS MIRACLE-GRO COMPANY (XNYS:SMG)
Sector:
- 811200.00K
Industry:
Agricultural Inputs
CEO:
Mr. James Hagedorn
Total Employees:
2,400
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -95.03% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE SCOTTS MIRACLE-GRO COMPANY(SMG) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AGRICULTURAL INPUTS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
61.16
One Month Price Target:
$61.61
Six Month Price Target :
$63.85
Likely Price in One Year's Time:
Ticker:
$66.53
Likely Trading Range Today Under (Normal Volatility)
$60.83
Price Upper limit ($) :
$61.45
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$57.43
This week:
$52.81
This month :
$44.47
Other Primary facts
Market Cap:
3.21B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
55.41M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.62%
-18.25%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$78.50
$70.66
$43.82
$51.66
Medium risk (<10%) entry points
Buy Call
Sell Call
$68.11
Buy Put:
Sell Put:
$66.44
$54.19
$55.88
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SMG
Sharpe Ratio:
-1.38%
Comparison:
SMG, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -137.16% lower than the industry
& is -160.73% lower than the market/S&P 500 average
Average Returns/Yield of
SMG
Daily returns:
-0.03%
Weekly returns:
-0.16%
Monthly returns:
-0.64%
Yearly returns:
42.20%
Comparison of returns:
Average annual returns/yield (last 3 years) is -118.23% below industry average
Classification:
SMG, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.67
Statistical test of Returns:
SMG has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.96%
Weekly Volatility:
6.61%
Monthly Volatility:
13.22%
Yearly Volatility:
45.79%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.02%
Volatility in last five trading days has been -31.73% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.10%
Weekly VaR:
-13.65%
Monthly VaR:
-27.29%
How Much Can the price of
SMG
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-25%
Worst case (decline):
-94.54%
This translates to price declining to:
$46.17
This translates to price declining to:
$3.34
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
SMG is a 92.62% riskier investment compared to the market/S&P 500 & is 65.01% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -27.09% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SMG
Beta in relation to market/S&P 500--1.31
Expected beta in 1 year's time:
0.829
Expected beta in 3 year's time:
1.172
Unlevered (debt free) Beta:
0.335
Beta in relation to Nasdaq (XNAS):
0.954
Beta in relation to all global stocks::
0.799
Beta Comparison & Analysis
Beta of competitors/peers::
1.354
Beta is -3.46% lower than peers
Average Industry Beta:
1.358
Beta is -3.77% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
28.99%
Sustainable growth rate is 70.51% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.198
Alpha is -166.56% below industry average alpha yield
Alpha is -1260% below the market average
Analysis of Cost of Capital of
SMG
Equity cost of capital:
0.121
Equity cost of capital is -2.81% below industry mean WACC
Unlevered (without debt) cost of capital:
3.10%
Before-tax cost of debt:
2.28%
After-tax cost of debt:
1.80%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.80%
WACC is -37.93% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$82.89
Revenue growth rate per share of (3Y):
4.07
Annual revenue growth rate is 77.98% above the industry average
EPS:
$7.11
Expected Annual growth rate of EPS (3Y):
-2.89%
Expected future EPS growth rate is -121.51% lower than the Agricultural Inputs industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: -100.00%
Equity growth rate per share is -249.61% lower than the industry
Debt per share
$55.63
EBITDA per share
$12.66
Valuation Analysis Today of
SMG
P/E Ratio:
11.47
P/E Ratio of Competitors/Peers:
9.15
P/E ratio is 25.32% higher than main peers & is -22.35% lower than the industry
Stock price/value with industry average P/E ratio: $105.00
SMG is -41.75% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.74
Price to sales ratio is -66.02% below the industry mean
P/B (Price to book value ratio):
4.07
-
-
Net income growth rate (3Y):
712.57%
Net income growth rate is 123.99% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 8.64%
Dividend yeild: 4.32%
Previous Dividend: $0.66
Previous adjusted dividend: $0.66
Previous Dividend: $2.64
Expected next dividend best case: $1.76
Expected next dividend worst case: -$0.44
Average dividend payment (long-term): $1.02
Average dividend increase/decrease (growth rate) % per period: 68.09%
Expected next dividend payment date: 09/08/2022
Expected next dividend record date: 25/08/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 06/10/2022
Previous dividend record date: 27/05/2022
Previous dividend declaration date: 25/04/2022
Dividend History:
2022-05-26--$0.66
2021-11-26--$0.66
2021-05-26--$0.62
2022-02-23--$0.66
2021-08-26--$0.66
2021-02-23--$0.62
Dividend growth rate is -648.45% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
370.63%
Net debt to equity ratio:
387.99%
Debt to assets ratio:
58.80%
Net debt to assets ratio:
61.55%
Debt-to-asset ratio is 26.29% above industry average
Ability to repay debt:
Interest coverage ratio:
9.48
Interest coverage ratio is -23.87% less than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 1.31%
Analysis of Key Statistics
Correlation of price movement with the market:
0.59
Statistical significance of correlation:
SMG has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.437
Stock price is 35.00% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.437
Correlation of price movement with Nasdaq (^IXIC):
-0.055
Covariance of price movement with the market:
-0.095
Kurtosis
5.417
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.253
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
SMG
Gross Profit Margin Ratio:
104%
Operating Profit Margin Ratio:
13.44%
Operating profit margin is 12.57% higher than the industry
Net Profit Margin Ratio:
104%
Effective Tax Rate:
21.79%
Effective tax rate is 56.10% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
51.64%
Return on equity (ROE) is 92.85% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
8.19%
Return on assets (ROA) is 22.35% higher than the industry
Financial Leverage:
2.4x
Current Ratio:
2.51
Current ratio is 42.92% above industry average
Cash Conversion Cycle (days):
33.9
Cash conversion cycle is 62.80% above industry average
The remaining useful life of property plant & equipment is: 6.7 years
Stock based compensation to net income ratio:
1.70%
In-depth Efficiency Analysis
Revenue generated per employee:
1.9M
Each employee generates -1% less revenue than industry average revenue per employee
EBITDA generated per employee:
292.2K
Each employee generates -54% less EBITDA than industry average revenue per employee
Profit generated per employee:
178.9K
Each employee generates -43% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 338.0K
Each employee generates -953% less free cash flow than industry average revenue per employee
Assets/Capital per employee
1.2M
Each employee generates -953% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -100.00%
Growth rate in R&D investment/expenditure is -249.61% lower than the industry
Competitors/Peer firms of
SMG
Gold Fields Limited (XNYS:GFI)
Olin Corporation (XNYS:OLN)
SIBANYE STILLWATER LIMITED (XNYS:SBSW)
Ternium SA (XNYS:TX)
MP Materials Corp (XNYS:MP)
CEMEX PUBLICLY TRADED STOCK CORPORATION WITH VARIABLE CAPITAL (XNYS:CX)
ANGLOGOLD ASHANTI LTD (XNYS:AU)
West Fraser Timber Co. Ltd. (XNYS:WFG)
HUNTSMAN CORPORATION (XNYS:HUN)
Current Analyst Ratings
Strong buy�8%
Buy�8%
Hold�21%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/2/22
Revenue:
4.59B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
3.26B
1.33B
36.30M
381.00M
690.70M
112.00M
2.42B
3.15B
-
74.00M
75.20M
701.38M
617.40M
429.48M
563.07M
122.70M
429.48M
Statement of Cash Flow
Date:
Period:
24.90M
Differed Income Tax :
-
Stock Based Compensation :
7.30M
Change in Working Capital :
- 761300.00K
Accounts Receivables:
71.60M
Other Working Capital:
- 1200.00K
Other Non-Cash Items:
14.00M
Net Cash Provided by Operating Activities:
- 765100.00K
Investments in PP&E:
- 46100.00K
Net Acquisitions:
- 202500.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/1/22
2022
Q1
16.40M
-
16.40M
310.80M
1.66B
308.20M
2.29B
615.80M
681.50M
811.70M
199.70M
-
640.90M
2.95B
-
5.24B
427.70M
160.70M
-
-
326.80M
915.20M
3.08B
413.20M
3.50B
-
4.41B
486.90M
1.52B
- 60700.0K
-
January 1, 2022 at 7:00:00 AM
6.41B
831.60M
5.24B
-
3.24B
3.2B
-
3.40M
- 245200.00K
- 40800.00K
-
- 129500.00K
- 37100.00K
990.00M
782.60M
-
- 227700.00K
16.40M
244.10M
- 765100.00K
- 46100.00K
- 811200.00K
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
SMG
2023
2024
2025
2026
2027
$77.17
$83.95
$91.32
$99.35
$108.07