2Q18 Miss; Lowering Estimates
- 2Q18 (Mar) adjusted EPS was $2.88 (vs $2.57 a year earlier), up 12% YoY due to a lower tax rate (of 26% vs 36%) but 21 cents below our projection (and 43 cents under consensus), as lower volumes from the cannabis regulatory disruptions in California and a delayed start to the lawn and garden season resulted in margins below what we modeled;
- Our FY18 EPS estimate (excluding the pending acquisition of Sunlight Supply) is now $4.04 (from $4.29 previously), up 2% from a record FY17, as the 2Q shortfall and continued disruptions in the cannabis market in California are being offset by a lower tax rate;
- Our FY19 EPS estimate (excluding Sunlight Supply) is now $4.67 (from $5.07), up 16% from our FY18 projection.
Scotts Miracle-Gro is a manufacturer and marketer of consumer lawn and garden products in North America. The company's segments are: United States Consumer, which consists of the company's consumer lawn and garden business located in United States; Hawthorne, which consists of the company's indoor, urban and hydroponic gardening business; and Other, which consists of the company's consumer lawn and garden business in geographies other than the United States and the company's product sales to nurseries, greenhouses and other customers. The company manufactures, markets and sells lawn and garden products in the following categories: lawn care, gardening and landscape, hydroponics, and controls.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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