It has been about a month since the last earnings report for Scotts Miracle-Gro (SMG). Shares have lost about 18.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Scotts Miracle-Gro’s Q1 Earnings and Revenues Beat Estimates

Scotts Miracle-Gro Company reported a first-quarter fiscal 2025 (ended Dec. 28, 2024) loss of $69.5 million or $1.21 per share compared with a loss of $80.5 million or $1.42 per share in the year-ago quarter.

Barring one-time items, the adjusted loss was 89 cents a share, narrower than a loss of $1.45 a year ago. The figure was also narrower than the Zacks Consensus Estimate of a loss of $1.28.

Net sales rose around 1.6% year over year to $416.8 million and beat the consensus mark of $393.4 million. The first quarter typically accounts for less than 15% of full-year sales due to the seasonal nature of the business.

Segment Details

In the fiscal first quarter, net sales in the U.S. Consumer division were up 11% year over year to $340.9 million. It topped our estimate of $318.8 million. A robust fall season across all categories, as well as early retailer load-in for the spring season, drove the upside. 

Net sales in the Hawthorne segment plunged 35% year over year to $52.1 million in the reported quarter. The figure missed our estimate of $61.7 million. The reduction was owing to Hawthorne's strategic departure from third-party distribution.

Net sales in the other segment were up 1% year over year to $23.8 million.

Balance Sheet

At the end of the quarter, the company had cash and cash equivalents of $9.8 million, down from $10.4 million in the year-ago quarter. Long-term debt was $2,636.9 million, down from $2,969 million.

Fiscal 2025 Outlook

The company reaffirmed full-year sales, adjusted gross margin and adjusted EBITDA guidance, which it stated last quarter, and reduced interest expense guidance. U.S. consumer net sales are projected to experience low single-digit growth, excluding non-repeat sales for AeroGarden and bulk raw material sales. Hawthorne's net sales are expected to decrease by mid-single digits. The company expects adjusted gross margin of around 30% for fiscal 2025. Adjusted EBITDA is projected to range from $570 million to $590 million. Interest expenses are estimated to be $15 million to $20 million lower than the previous year compared with an earlier expected decrease of $10 million.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Scotts has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Scotts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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