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Investing.com - Stifel upgraded Scotts Miracle-Gro (NYSE:SMG) from Hold to Buy while maintaining its $70 price target, citing expectations for the company to approach parity with consumer staples peers. The price target represents a 25% upside from the current price of $56.02, aligning with the broader analyst community’s bullish outlook. According to InvestingPro data, the stock is currently undervalued based on Fair Value estimates.
The research firm expressed surprise at the stock’s muted reaction following fourth-quarter fiscal 2025 earnings, noting that shares rose only 2.9% despite falling 12% ahead of the report while the broader market gained 6%. This tepid response comes amid challenging market conditions for SMG, which has seen a year-to-date decline of 12.78% and a one-year drop of 21.44%.
Stifel highlighted that Scotts Miracle-Gro’s initial fiscal year 2026 earnings per share guidance exceeded its estimates, supported by what it considers a pragmatic revenue growth outlook and better-than-expected gross margin trajectory. The company’s current gross profit margin stands at 29.77%, with analysts forecasting EPS of $3.72 for fiscal 2025.
The firm believes Scotts has performed well in an imperfect environment, validating its leading market position and demonstrating category resilience, with the company’s importance to retailers amplified during an extended home improvement sector slowdown. InvestingPro data shows the company maintains a healthy financial position with an overall Financial Health score of 2.77 (rated "GOOD") and a solid current ratio of 1.61.
With target leverage levels approaching, Stifel emphasized not only enhanced optionality and investability but also Scotts’ ability to address inefficiencies to further strengthen its category leadership while driving gross margin expansion, supporting Stifel’s projected 14% compound annual growth rate for earnings per share from fiscal 2025 through fiscal 2027. The company offers a notable 4.71% dividend yield, potentially attractive to income investors. For deeper insights into SMG’s valuation metrics and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which covers 1,400+ US equities with expert analysis and actionable intelligence.
In other recent news, Scotts Miracle-Gro reported its fourth-quarter earnings for 2025, which slightly exceeded earnings expectations. The company posted an EPS of -$1.96, marginally better than the forecasted -$1.97. However, revenue fell short of projections, coming in at $387.4 million compared to the anticipated $396.2 million. Despite the revenue miss, there was a minor pre-market increase in the stock, indicating a nuanced investor reaction. Jefferies raised its price target for Scotts Miracle-Gro to $74.00 from $71.00, maintaining a Buy rating. The firm noted that the company’s marketing shift and retailers ordering closer to their point-of-sale curve contributed to a slower start for fiscal 2026. These developments underscore the company’s strategic initiatives and product innovations as key drivers for future growth.
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