3Q17 Tops; Increasing FY17 Estimate
- 3Q17 (June) adjusted EPS of $2.63 (vs $2.17 a year earlier) was up 21% YoY and 11 cents ahead of our projection due to better-than-anticipated sales and margins;
- SMG’s hydroponics business (around 9% of revenue, including cannabis) rose 21% organically;
- Due to the 3Q17 outperformance, our FY17 EPS estimate is now $4.15 (vs FY16’s record $3.90 and our previous $4.10 projection), which does not include the pending sale of the European business (expected in the current quarter), until the restated historical results are provided;
- Our FY18 EPS estimate, including the pending European sale, is $4.50 (from $4.65 previously), up 14% when using an adjusted base of approximately $3.95 for FY17;
- SMG’s Board of Directors approved a 6% increase in the quarterly dividend today to 53 cents per share, marking the 8th consecutive year of higher dividends.
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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