Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.4 |
| P/S | 9.5 |
| EV/EBITDA | 4.7 |
| Fwd P/E | 8.0 |
| PEG | 7.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.1x
- ▸PEG: 0.98
SMG · Why this verdict
Why Scotts Miracle-Gro Company (The (SMG) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Scotts Miracle-Gro beat earnings in all 4 of the last 4 quarters with an average surprise of 12.9% and converts 372% of net income to free cash flow, but the stock has reached analyst price targets with essentially zero upside remaining, making the entry timing poor despite sound operational performance.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The current price of $63.17 has reached the analyst consensus take-profit target of $63.22, with only 0.1% upside remaining, meaning the stock is priced at fair value with no margin of safety for new buyers entering at current levels. Targets | Analyst price targets are revised upward to at least $72 over 12 months, reflecting continued earnings growth, to reopen meaningful upside headroom. | ↓Deteriorating |
| CounterA stock in a breakout pattern with golden cross technical structure and positive momentum can trade above analyst targets for extended periods when the underlying operational momentum is strong; analysts may simply be slow to update targets. | ||
Scotts is in a golden cross breakout pattern with an RSI of 64 and MACD bullish, above all major moving averages, with volume accumulation confirming institutional buying, suggesting the technical picture favors continued price strength if the fundamental earnings trend holds. Momentum breakdown | The golden cross pattern holds and the stock closes above $65 within 3 months, confirming the breakout is genuine rather than a false signal. | ↑Improving |
| CounterA breakout at exactly the analyst price target is a common distribution point; institutions that drove the rally may use the target-price milestone as a sell signal, capping further upside and potentially reversing the breakout. | ||
Scotts Miracle-Gro beat analyst earnings estimates in all 4 of the last 4 quarters including a 12.9% beat in the most recent quarter and a 23.3% beat the quarter before, demonstrating consistent ability to meet or exceed market expectations across seasonal agricultural cycles. Earnings | The earnings beat streak extends to at least 6 consecutive quarters with average surprise remaining above 8% over the next 12 months. | ↑Improving |
| CounterConsumer lawn and garden spending is highly weather-dependent and sensitive to housing market activity; a cool spring or construction slowdown could easily interrupt the beat streak as consumers delay outdoor spending. | ||
Free cash flow is 372% of net income and Scotts holds a Piotroski F-Score of 8 out of 9, indicating the company's accounting income substantially understates the real cash the business generates, which supports dividend sustainability and debt reduction. Quality breakdown | Free cash flow conversion remains above 200% of net income over the next 12 months, confirming the earnings quality advantage is structural rather than temporary. | →Stable |
| CounterThe elevated free cash flow relative to net income may reflect depreciation-heavy accounting rather than superior cash generation; the operating margin advantage dissipates if raw material costs increase in a commodity inflation cycle. | ||
The current price of $63.17 has reached the analyst consensus take-profit target of $63.22, with only 0.1% upside remaining, meaning the stock is priced at fair value with no margin of safety for new buyers entering at current levels.
↓DeterioratingTargets
- Expectation
- Analyst price targets are revised upward to at least $72 over 12 months, reflecting continued earnings growth, to reopen meaningful upside headroom.
CounterA stock in a breakout pattern with golden cross technical structure and positive momentum can trade above analyst targets for extended periods when the underlying operational momentum is strong; analysts may simply be slow to update targets.
Scotts is in a golden cross breakout pattern with an RSI of 64 and MACD bullish, above all major moving averages, with volume accumulation confirming institutional buying, suggesting the technical picture favors continued price strength if the fundamental earnings trend holds.
↑ImprovingMomentum breakdown
- Expectation
- The golden cross pattern holds and the stock closes above $65 within 3 months, confirming the breakout is genuine rather than a false signal.
CounterA breakout at exactly the analyst price target is a common distribution point; institutions that drove the rally may use the target-price milestone as a sell signal, capping further upside and potentially reversing the breakout.
Scotts Miracle-Gro beat analyst earnings estimates in all 4 of the last 4 quarters including a 12.9% beat in the most recent quarter and a 23.3% beat the quarter before, demonstrating consistent ability to meet or exceed market expectations across seasonal agricultural cycles.
↑ImprovingEarnings
- Expectation
- The earnings beat streak extends to at least 6 consecutive quarters with average surprise remaining above 8% over the next 12 months.
CounterConsumer lawn and garden spending is highly weather-dependent and sensitive to housing market activity; a cool spring or construction slowdown could easily interrupt the beat streak as consumers delay outdoor spending.
Free cash flow is 372% of net income and Scotts holds a Piotroski F-Score of 8 out of 9, indicating the company's accounting income substantially understates the real cash the business generates, which supports dividend sustainability and debt reduction.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income over the next 12 months, confirming the earnings quality advantage is structural rather than temporary.
CounterThe elevated free cash flow relative to net income may reflect depreciation-heavy accounting rather than superior cash generation; the operating margin advantage dissipates if raw material costs increase in a commodity inflation cycle.
Per-dimension breakdown
Quality
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 5.9 |
| Gross margin | 2.5 |
| Op margin | 10.0 |
| Net margin | 1.6 |
| Current ratio | 4.8 |
| FCF quality | 10.0 |
| Moat | 4.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 372% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
3.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.8 |
| EPS growth | 3.7 |
Momentum
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 9.3 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.8 |
| Analyst rating | 6.6 |
| Price target | 5.7 |
- ▸Light analyst coverage (6.0) — signal dampened
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.3 |
| quality rank | 2.2 |
| growth rank | 1.1 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.5 |
| support resistance | 3.3 |
| 52w position | 8.8 |
Risk (lower is worse)
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 4.2 |
| volatility | 1.6 |
| beta | 4.0 |
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.9 |
| dividend safety | 4.8 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 9 days
- ▸Dividend: 3.7%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- MOMENTUM:8.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
-0.72
Upside
-9.1%
Downside
12.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 53, MACD bullish
EdgeCatalyst-Driven — Earnings in 9d with 4/4 beat streak
SuitabilityAggressive — Beta 1.80>1.3, MCap $4.1B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:8.8>=5.5. Top dim: Momentum at 8.8; weakest: Risk (lower is worse) at 3.4. No conviction either direction.
The strongest dimensions are Momentum at 8.8, Insider at 7.3, and Catalyst at 7.0; the weakest are Risk (lower is worse) at 3.4, Peer rank at 3.4, and Growth at 3.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.72 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Four Quarter Beat Streak
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P2Exceptional Cash Conversion
Trip ifFree cash flow conversion falls below 100% of net income in any reported annual period.
- P3Price At Analyst Target Zero Upside
Trip ifAnalyst consensus price target remains below $65 for more than 6 months while price holds above $60, indicating the valuation gap has closed permanently.
- P4Positive Momentum Breakout
Trip ifStock price drops below $55, more than 13% below the current price of $63.17, indicating the breakout has failed.