Scotts Miracle-Gro Co (SMG): what the price assumes

In the published model solve dated 2026-Q2, anchored at $66.14, Scotts Miracle-Gro Co (SMG) is priced for +4.9% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SMG

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.1pp.

How unusual the bet is: within-range

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.8%); the inversion above states its own rate.

Per-Model Detail (n=4)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Scotts Miracle-Gro completed its retreat to the core in April 2026 by selling Hawthorne, leaving the dominant US consumer lawn-and-garden franchise whose model is to "inspire consumers to create retail demand" (FY2025 10-K, accession 0000825542-25-000022), with peak-quarter gross margin recovering to 41.8%.

• The biggest risk is concentration stacked on seasonality: "The Home Depot and Lowe's are our two largest customers" (accession 0000825542-25-000022), sales bunch into two spring quarters, and $2.36 billion of net debt with 3.8 times interest coverage leaves little room for a bad season.

• Watch the fiscal third-quarter print (early August) for June sell-through against reaffirmed $4.15 to $4.35 adjusted EPS guidance, continued progress below 3.71 times leverage, and the first moves of the new CEO installed in June 2026.

Bull Case

Scotts Miracle-Gro just finished a multi-year capital-allocation repair job, and the exit velocity is visible in every line. The Hawthorne hydroponics business, the acquisition spree that loaded the balance sheet, was classified held-for-sale and sold in April 2026 to Vireo Growth in a share exchange. Net leverage fell to 3.71 times debt-to-EBITDA, below 4 times for the first time in four years and down from 4.41 a year earlier, and management has pointed to the previously announced multi-year share repurchase program as the next use of the freed cash flow. Through it all the company kept paying $0.66 per quarter, about a 4% yield at today's $65.43 (July 2026). Sell the distraction, pay down the debt, keep the dividend, then buy back stock: it is the whole capital-allocation textbook in one sequence.

What remains after the divestiture is the business Scotts should arguably always have been: the dominant US consumer lawn and garden franchise. The peak-season quarter delivered revenue of $1.46 billion, up 2.8% and $60 million past projections, with non-GAAP earnings of $4.53 per share beating by $0.51 and gross margin improving 240 basis points to 41.8%. The model is brand-driven demand creation; the 10-K describes marketing built on "providing innovative and differentiated products and continually increasing brand and product awareness to inspire consumers to create retail demand" (FY2025 10-K, accession 0000825542-25-000022), and the newest channel is compounding fastest, with e-commerce point-of-sale dollars up 22% year to date.

The price still carries the scars of the Hawthorne era rather than the shape of what emerged. The market pays about 7 times operating income on the pricing framework's basis, below what even a 5% annual decline in operating profit would warrant. Against reaffirmed fiscal 2026 adjusted earnings guidance of $4.15 to $4.35 per share, today's price is roughly 15 times, an ordinary consumer-staples multiple for a category leader with margin recovery, a new CEO installed in June 2026 to run the operational next chapter, and deleveraging converting enterprise value into equity value every quarter.

Bear Case

This is a seasonal, weather-hostage business sold through two customers, and the cycle risks compound rather than diversify. The 10-K is explicit on both counts: annual net sales are "further concentrated in the second and third fiscal quarters by retailers who rely on our ability to deliver products closer to when consumers buy our products", and "The Home Depot and Lowe's are our two largest customers and are the only customers that individually represent more than 10% of reported consolidated net sales during any of the three most recent fiscal years" (FY2025 10-K, accession 0000825542-25-000022). A wet spring, a soft housing market, or a single retailer deciding to run leaner seasonal inventory flows straight through the P&L, and the filing concedes the pricing lever is not free: "Our projections may not accurately predict the volume impact of price increases" (accession 0000825542-25-000022). The current year's beat was earned in the season's easy half; the June quarter, when sell-through either validates retailer orders or becomes fall returns, is where lawn-and-garden years go to die.

The reported numbers still need untangling before the cheapness claim survives contact. Trailing GAAP earnings run $1.84 per share (about 35 times at today's price), while the guided adjusted figure is $4.15 to $4.35; the gap is Hawthorne wind-down charges and other adjustments, and the same split shows up in operating income, where the EDGAR trailing tally reads $445 million against the pricing framework's $945 million record basis, a divergence past 100%. Every method that anchors to the GAAP trailing year finds the stock expensive: earnings-based reads land around a quarter of the price, cash-flow capitalization under half, and even the dividend-growth models land near $29 to $33 because the payout barely grew through the leverage years. The cheap story requires trusting the adjusted numbers as the real run-rate; the expensive story requires only reading the statements as filed.

The balance sheet, though improving, still disciplines everything. Net debt of about $2.36 billion runs 5.3 times the EDGAR-basis trailing pre-tax operating income with interest covered just 3.8 times, and cash on hand at quarter-end was thin. The dividend costs roughly $150 million a year, the buyback program now competes for the same cash, and a leadership transition after decades under one CEO adds execution uncertainty exactly when the company is promising a shareholder-friendly turn. If the post-Hawthorne run-rate disappoints, or one bad spring interrupts the deleveraging path, the multiple the bulls quote applies to earnings that never materialize.

Valuation

Two operating-income bases coexist and must be named before any multiple means anything: the pricing framework's record basis carries trailing operating income of about $945 million, while the EDGAR quarterly tally reads $445 million, a divergence past 100% created mostly by Hawthorne wind-down and other charges landing in the GAAP line. On the record basis the market pays about 7 times operating income, below what even a 5% annual operating-profit decline would warrant; on the GAAP trailing base the same price is a premium multiple. Management's own reconciliation of the year is the guided adjusted earnings of $4.15 to $4.35 per share, which puts $65.43 (July 2026) at roughly 15 times forward adjusted earnings against trailing GAAP earnings of $1.84.

The method families, which run on the GAAP statements, uniformly fail to reach the price: earnings-capitalization reads land around a quarter of it, blended relative multiples about half, and the dividend-discount reads near $29 to $33 on the $2.67 annual payout. No family justifies the price on trailing GAAP numbers, which is the honest description of what a buyer at today's level is doing: paying for the post-divestiture run-rate, not the transition-year statements. The evidence for that run-rate so far: peak-quarter revenue of $1.46 billion (up 2.8%, $60 million above projections), gross margin of 41.8% (up 240 basis points), and reaffirmed full-year guidance. The Hawthorne sale closed in April 2026, so fiscal 2027 becomes the first clean year of the US Consumer pure play.

Solvency is the improving constraint. Net debt of about $2.36 billion sits at 5.3 times the EDGAR-basis trailing pre-tax operating income with 3.8 times interest coverage, but the company's own leverage covenant math, 3.71 times debt-to-EBITDA and falling from 4.41, reads much healthier because it runs on adjusted earnings before the wind-down charges. The share count has been roughly flat (up 1.4% a year), the $0.66 quarterly dividend yields about 4%, and the repurchase program waits on continued deleveraging. The decisive question the price poses is single and testable: is $4.15 to $4.35 the real earning power of the remaining business? The June-quarter sell-through data answers most of it.

Catalysts

The transformation events have already landed this year; what remains is proof. The Hawthorne Gardening Company sale to Vireo Growth completed in April 2026, paid in Vireo shares held among other investments, ending the hydroponics experiment and leaving a US Consumer pure play plus a Canadian business. In late June 2026 the board appointed Nathan E. Baxter as president and CEO, closing out Jim Hagedorn's decades-long run, and reaffirmed fiscal 2026 guidance alongside the transition. New-CEO capital-allocation signals (buyback pace, portfolio moves, cost programs) are the discretionary catalysts from here.

The operating calendar peaks now. The April 29 second-quarter report delivered the season's setup: revenue of $1.46 billion (up 2.8%, $60 million above projections), non-GAAP EPS of $4.53 (a $0.51 beat), 41.8% gross margin, e-commerce point-of-sale dollars up 22% year to date, and reaffirmed full-year guidance of low single-digit US Consumer sales growth and $4.15 to $4.35 in adjusted EPS. The fiscal third-quarter report, on the usual early-August cadence, covers the June quarter where consumer sell-through either confirms the retailer orders already shipped or shows up as weak point-of-sale and elevated returns; for a company whose year is two quarters long, it is the season's verdict.

The balance-sheet track has its own milestones: leverage at 3.71 times debt-to-EBITDA, below 4 for the first time in four years, the $0.66 quarterly dividend (most recently paid June 5, 2026), and the multi-year repurchase authorization that activates in earnest as leverage falls. Each quarter-turn of deleveraging transfers enterprise value to the equity; a leverage print starting with a 3.3 or lower alongside maintained guidance would be the cleanest re-rating trigger on the board.

Peer Cohorts (Per Segment, With Filing Citations)

U.S. Consumer (reported)

• CENT (Central Garden & Pet Company)
• FY2025 10-K: …cooperation and unreliable. Furthermore, methodologies for measuring, tracking and reporting on such matters continue to change over time, which requires our processes and controls for such data to evolve as well. Compliance with any new or more stringent laws or regulations, customer reporting requirements, or…
• FY2025 10-K: …channels. We deliver a wide range of branded products, private label offerings, packaging and merchandising solutions and a high-touch customer service. Major retailers value our national scope and operational capabilities while independent retailers value our premium portfolio and service levels. We believe these…
• SPB (Spectrum Brands Holdings, Inc.)
• FY2025 10-K: …or sold. Our inability to obtain, or the cancellation of, any registration could have an adverse effect on our business, financial condition and results of operations. The severity of the effect would depend on which products were involved, whether another product could be substituted and whether our competitors were…
• FY2025 10-K: 109177 spb:NorthAmericaExcludingUnitedStatesMember 2024-09-30 0000109177 srt:AsiaPacificMember 2025-09-30 0000109177 srt:AsiaPacificMember 2024-09-30 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES…
• WDFC (WD-40 COMPANY)
• FY2025 10-K: …for these agreements as of August 31, 2025. From time to time, the Company enters into indemnification agreements with certain parties in the ordinary course of business, including agreements with lenders, lessors, contract manufacturers, marketing distributors, customers and certain vendors. Indemnification…
• FY2025 10-K: …distribution centers that warehouse and ship the Company's products to customers. The contract manufacturers maintain title and control of certain raw materials and components, materials utilized in finished products, and the finished products themselves until shipment to the Company's third-party distribution…
• RPM (RPM International Inc.)
• FY2025 10-K: …Square Feet Of Location Business/Segment Floor Space Hertogenbosch, Netherlands Rust-Oleum (Consumer) 517,627 Cacapava, Brazil Euclid (CPG) 383,777 Pleasant Prairie, Wisconsin Rust-Oleum (Consumer) 261,000 Fairborn, Ohio Rust-Oleum (Consumer) 258,886 Cleveland, Ohio Day-Glo (SPG) 224,624 LaFayette, Georgia Euclid…
• FY2025 10-K: …insurance carriers or other third parties but do reflect anticipated allocations among potentially responsible parties at federal superfund sites or similar state-managed sites, third-party indemnity obligations, and an assessment of the likelihood that such parties will fulfill their obligations at such sites. On…

Hawthorne (reported)

• CENT (Central Garden & Pet Company)
• FY2025 10-K: …a direct subsidiary of Central Garden & Pet Company, a Delaware corporation (the "Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein), and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee under the indenture referred to…
• FY2025 10-K: …due 2023 and the 5.125% Senior Notes due 2028 10-Q 001-33268 4.1 8/2/2019 4.7 Eleventh Supplemental Indenture, dated as of October 16, 2020, by and among the Company, certain guarantors named therein and Wells Fargo Bank National Association, as trustee, relating to the 4.125% Senior Notes due 2030 8-K 001-33268 4.1…
• SPB (Spectrum Brands Holdings, Inc.)
• FY2025 10-K: …or use. Location Function / Use Owned / Leased Size (Sqft) Expiration U.S. Locations Blacksburg, Virginia Manufacturing Facility - GPC Owned 208,000 n/a Bridgeton, Missouri Manufacturing Facility - GPC Leased 153,300 2029 Earth City, Missouri Administrative Offices and NA Shared Operations Leased 112,000 2035…
• FY2025 10-K: …Operating Long-term operating lease liabilities 54.5 87.0 Finance Long-term debt, net of current portion 73.6 72.2 Total lease liabilities $ 171.6 $ 199.9 As of September 30, 2025, the Company has unrecognized commitments of approximately $ 14.0 million related to a distribution center with a third party logistics…
• WDFC (WD-40 COMPANY)
• FY2025 10-K: …0000105132 2025 FY false P3Y P1Y http://wd40.com/20250831#LeaseRightOfUseAsset http://wd40.com/20250831#LeaseRightOfUseAsset http://wd40.com/20250831#LeaseRightOfUseAsset http://wd40.com/20250831#LeaseRightOfUseAsset http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent…
• FY2025 10-K: 29 Table of Contents various factors, including economic conditions such as the inflationary environment we have experienced in the last several fiscal years, and our level of investment in activities for the future such as those related to quality assurance, regulatory compliance, information technology,…
• RPM (RPM International Inc.)
• FY2025 10-K: /s/ Frank C. Sullivan Chairman, President, Chief Executive Officer and a Director Frank C. Sullivan (Principal Executive Officer) /s/ Russell L. Gordon Vice President and Chief Financial Officer Russell L. Gordon (Principal Financial Officer) /s/ Michael J. Laroche Vice President, Controller and Chief Accounting…
• FY2025 10-K: …2024-06-01 2025-05-31 0000110621 rpm:MarginAchievementPlanTwentyTwentyFiveMember us-gaap:FacilityClosingMember 2025-05-31 0000110621 rpm:PerformanceCoatingsGroupSegmentMember us-gaap:OperatingSegmentsMember srt:EuropeMember us-gaap:NonUsMember 2024-06-01 2025-05-31 0000110621…
• CC (Chemours Co)
• FY2025 10-K: …with respect to projected selling prices, market growth, and inflation rates, can significantly impact the outcome of our impairment tests. Estimates based on these assumptions may differ significantly from actual results. Changes in the factors and assumptions used in assessing potential impairments can have a…
• FY2025 10-K: …and polyfluorinated compounds at certain other manufacturing sites operated by the Company. It is possible that additional developments similar to those described above and centering on Fayetteville could arise in other locations. Other Environmental and Environmental-Related Matters On October 31, 2024, the Company…
• AVNT (AVIENT CORPORATION)
• FY2025 10-K: …is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services, which is typically when products are shipped from our facilities. The majority of the Company's sales agreements contain performance obligations satisfied at a point in time when control is…
• FY2025 10-K: …Officer (Principal Financial and Accounting Officer) February 17, 2026 Jamie A. Beggs /S/ ROBERT E. ABERNATHY Director February 17, 2026 Robert E. Abernathy /S/ RICHARD H. FEARON Director February 17, 2026 Richard H. Fearon /S/ GREGORY J. GOFF Director February 17, 2026 Gregory J. Goff /S/ NEIL GREEN Director…
• MTX (MINERALS TECHNOLOGIES INC.)
• FY2025 10-K: All lenders under the previous facility were repaid in full. As of December 31, 2025, there were no loans and $9.2 million in letters of credit outstanding under the Revolving Facility. On June 30, 2020, the Company issued $400 million aggregate principal amount of Notes. The Notes were issued pursuant to an…
• FY2025 10-K: …to the refinancing of our credit facilities, which represents the difference between the redemption payment and the carrying value of the debt at the refinancing date. All lenders under the previous facility were repaid in full. As of December 31, 2025, there were no loans and $ 9.2 million in letters of credit…
• CBT (Cabot Corporation)
• FY2025 10-K: …impact of our relationship with Dow on our operations in Barry, Wales, and demand for our products; the sufficiency of our cash on hand, cash provided from operations and cash available under our credit and commercial paper facilities to fund our cash requirements in both the next twelve months and the foreseeable…
• FY2025 10-K: …calendar year 2028. We are engaged in discussions with Dow as to how it will satisfy its performance obligations to us; however, when our agreement with Dow ceases we may be forced to limit our manufacturing operations at our Barry site, which could decrease the site's profitability and increase our costs. In…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.