The Scotts Miracle-Gro Co: UBS Summer Call Series: Key Takeaways From SMG

Research evidence excerpt

The Scotts Miracle-Gro Co: UBS Summer Call Series: Key Takeaways From SMG

Forecast returns

Forecast price appreciation -2.6%

Forecast dividend yield 4.3%

Forecast stock return 1.7%

Market return assumption 9.2%

Forecast excess return -7.5%

Company Description

The Scotts Miracle-Gro Company is a leading manufacturer, distributor, and marketer of

consumer lawn and garden products and lighting, nutrients, growing media, growing

environments, and hardware products for indoor and hydroponic gardening. The company

also is the exclusive agent of Monsanto for marketing and distribution of certain consumer

Roundup products in the US and other countries. SMG operates in three reportable

segments: US, Consumer, Hawthorne, and Other, with a majority of sales in the US.

Valuation Method and Risk Statement

Valuation method: Weighted average valuation framework involving forward P/E and EV/

EBITDA multiples.

Risks to our price target include any material changes in:

(a) General consumer preferences and/or government regulation pertaining to the

consumption, purchase, or manufacturing of HPC products;

(b) Government regulation with respect to commerce and/or taxation in general;

(c) Macroeconomic trends, interest rates, and/or credit environments within any of the

company's key markets;

(d) Competitive intensity between industry peers, including private label, within any of the

(e) Customer or supplier relationships;

(f) Commodity cost and/or foreign exchange fluctuations;

(g) The company's own ability to execute, whether with respect to R&D, sales and marketing,

and/or ongoing productivity efforts;

(h) The company's stance towards M&A (whether related to acquisitions, JVs, divestments, or

otherwise), or the prioritization of cash in general (whether related to organic business