Shares of Scotts Miracle-Gro Company (SMG) are soaring 5.03% in Thursday's trading session following the release of the company's second-quarter 2025 earnings report. The lawn and garden products maker's results and outlook have impressed investors, despite some mixed signals in the report.

The company reaffirmed its full-year guidance of $570 to $590 million in EBITDA, demonstrating confidence in its financial outlook. This, coupled with significant improvements in gross margin and strong point-of-sale (POS) unit growth, has boosted investor sentiment. Scotts Miracle-Gro reported a nearly 500 basis-point recovery in gross margin through the first half of the fiscal year, with a target of 30% by fiscal year-end.

Notably, the company achieved a 12.1% increase in POS units, with particularly strong growth in its garden and mulch businesses. This robust consumer demand, especially in key categories, has reassured investors about the company's market position and growth potential. Additionally, Scotts Miracle-Gro is making strategic investments in innovation, such as expanding the Miracle-Gro organic line and introducing new products in the controls portfolio.

However, the earnings report wasn't without challenges. Total company net sales declined by 7% in the quarter, with US consumer net sales down 5%, partly due to a colder start to the lawn and garden season. The Hawthorne segment, which focuses on cannabis-growing equipment, saw a steep 51% decline in net sales due to ongoing challenges in the cannabis market.

Despite these headwinds, the market appears to be focusing on the company's positive outlook and operational improvements. Scotts Miracle-Gro is on track to achieve more than $75 million in supply chain cost savings this year, contributing to its long-term goal of $150 million by fiscal 2027. This focus on efficiency and cost management is likely resonating well with investors.

Analyst reactions have been mixed but generally positive. Truist Financial reiterated a Buy rating on Scotts Miracle-Gro, while UBS slightly lowered its price target from $55 to $54. The divergent views among analysts suggest that while there's optimism about the company's direction, some caution remains due to ongoing challenges in certain segments.

As Scotts Miracle-Gro continues to navigate a competitive consumer landscape and works to optimize its business model, today's stock performance indicates that investors are encouraged by the company's progress and outlook for the remainder of the fiscal year.