SMG · Scotts Miracle-Gro

The thesis

Scotts Miracle-Gro's margin recovery gives the shares a modest edge over the market. Its fiscal 2027 guidance of $4.70 to $4.90 in adjusted earnings per share (EPS) matches or beats the $4.71 consensus Benzinga reported on 4 November 2026, even with about $100 million of expected commodity inflation. The fiscal first-quarter report, expected in late January 2027, and spring retail sales will show whether the pricing plan holds.

The case rests on price, cost and debt reduction. Sales growth is not part of it. Fiscal 2026 adjusted EPS from continuing operations rose 18% to $4.48, above the $4.30 to $4.45 guidance, while fourth-quarter sales fell 11% (company release, 4 November 2026). With the North American Hawthorne hydroponics business sold on 8 April 2026, the company is almost entirely a US consumer lawn and garden business. US Consumer accounted for $3,017.6 million of fiscal 2026 net sales of $3,288.9 million.

The shares closed at $63.74 on 12 November 2026, down from $66.34 on 9 November 2026. They remain above the 3 November 2026 close, the last session before results, so the results-day gain still holds. No company filing, guidance change or analyst action since the 5 November 2026 target raises has changed the earnings case.

Bullish and bearish views on The Scotts Miracle-Gro Company

The bull case on The Scotts Miracle-Gro Company (SMG), in brief: guidance matched or beat consensus. The bear case: fourth-quarter sales missed.

Bull case

• Guidance matched or beat consensus. The company guided fiscal 2027 sales to $3.355 billion to $3.420 billion against a $3.361 billion estimate, and adjusted EPS to $4.70 to $4.90 against $4.71 (Benzinga, 4 November 2026).
• Margins widened in fiscal 2026. Adjusted gross margin rose 80 basis points to 32.4% (company release, 4 November 2026). On the 4 November 2026 call, management guided to further expansion in fiscal 2027, likely at the low end of a 50 to 100 basis point range.
• Costs are locked in earlier than usual. About 55% of cost of goods sold is locked, against a typical 40% at this point in the year. More than 80% of urea is locked and more than 50% of diesel is hedged (4 November 2026 call).
• Price rises and savings offset inflation. Management plans an average price rise of about 4%, or about 2% after expected lost volume, plus at least $35 million of supply chain savings (4 November 2026 call).
• Cash flow is paying down debt. Free cash flow was $278.4 million in fiscal 2026, and $250 million of 5.250% notes were redeemed on 11 September 2026. Net leverage, meaning net debt relative to adjusted earnings, improved 0.21 times to 3.89 times (company release, 4 November 2026).
• Analysts raised targets after the report. UBS raised its target to $77 from $70, keeping a Buy rating. Wells Fargo raised its target to $76 from $71, keeping an Overweight rating. Both moves came on 5 November 2026. Wells Fargo had already raised its target from $60 to $71 on 2 November 2026.

Bear case

• Fourth-quarter sales missed. Sales of $302.9 million fell 11% and missed the $306.1 million estimate. The adjusted loss widened to $2.16 a share from $1.97, though it was smaller than the $2.21 loss analysts expected (company release; Benzinga, 4 November 2026).
• Operating earnings trailed guidance. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2% to $579.9 million. The company had reaffirmed mid single-digit growth as recently as 15 September 2026.
• Consumer purchases are barely growing. Branded point-of-sale (POS) dollars, a measure of retail sales to consumers, rose about 1% in fiscal 2026, and lawns fell 3% (4 November 2026 call). E-commerce POS dollars rose 24% and reached 13% of sales, the one strong area.
• Retailers hold more stock than a year ago. The largest retailers ended fiscal 2026 with inventory up low single digits. Management plans for a low single-digit sales headwind from this. CEO Nate Baxter attributed about half of the inventory effect to slower consumer purchases (4 November 2026 call).
• An acquisition props up guided growth. The $55 million Black Kow purchase, completed on 29 October 2026, adds 1% to 2% to fiscal 2027 sales growth, against a guided total of 2% to 4%. That leaves little organic growth.
• Leverage is still high. Net leverage was 3.89 times at 30 September 2026. Management does not expect to reach its 3.0 to 3.5 times target until fiscal 2029 (company release, 4 November 2026).
• A director sold after the results gain. Director David C. Evans sold 2,655 shares on the open market at $66.42 on 9 November 2026 (SEC Form 4 filed 12 November 2026). The sale is small, and it is the only open-market insider trade on file since the report.

Price setup

The shares closed at $63.74 on 12 November 2026, up 5.7% over three months on adjusted daily closes. That close is 15.4% below the 52-week intraday high of $75.34, set on 17 July 2026. It is well above the 52-week closing low of $48.44 from 28 September 2026.

The last close sits above both the 50-day moving average of $56.10 and the 200-day moving average of $61.15, as of 12 November 2026. The 3 November 2026 close, the session before results, lies just above the 200-day average. A fall below both would erase the post-results gain and return the shares to their pre-report range. The analyst targets of $76 (Wells Fargo) and $77 (UBS) sit near the July high.

The shares gave back part of the results-day move between 9 November 2026 and 12 November 2026 with no company news in that window. Insider activity since the report consists of annual stock awards on 28 October 2026, including 23,872 shares to CEO Nathan Baxter, and the one director sale (SEC Form 4 filings). The fiscal fourth quarter normally posts a loss, so the shares trade on guidance and spring-season expectations more than on the latest quarter.

Catalysts ahead

• 20 November 2026: Ex-dividend date for the $0.66 quarterly dividend declared on 3 November 2026. It shows the payout continuing while the company directs free cash flow to debt reduction.
• ~25 November 2026 (est.): Fiscal 2026 annual report on Form 10-K. It gives fuller disclosure on customer concentration and the debt schedule behind the deleveraging case.
• ~27 January 2027 (est.): Fiscal first-quarter 2027 report, date not yet announced. It is the first check on pricing, retailer inventory and management's expectation of flat first-half sales within full-year guidance.

What would change the view

A daily close below $61.80, the 3 November 2026 close before the fiscal 2026 report, which would erase the results-day gain. A cut to the $4.70 to $4.90 fiscal 2027 adjusted earnings per share guidance would also break the case.

The risks this note tracks, each with what would confirm it:

• Retailers cut inventory further than management's assumption of roughly flat levels, reducing shipments in the first half of fiscal 2027. Confirmed by: management reporting retailer inventory below fiscal 2026 levels, or first-half sales below last year, at the next quarterly report.
• Price rises of about 4% cost more volume than the roughly half that management assumes. Confirmed by: branded point-of-sale units or dollars declining in the fiscal 2027 quarterly reports, or lower net pricing guidance.
• Commodity inflation exceeds about $100 million and absorbs the expected gross margin expansion. Confirmed by: management raising its commodity headwind estimate or withdrawing gross margin expansion from fiscal 2027 guidance.
• Debt reduction slows, keeping net leverage away from the 3.0 to 3.5 times target for fiscal 2029. Confirmed by: fiscal 2027 free cash flow guidance falling below about $275 million, or year-end net leverage above 3.89 times.

What it trades with

Since the Hawthorne divestiture, the shares move mainly with US lawn and garden spending and with input costs, chiefly urea and diesel, which management partly locks in ahead of time. Results depend on the spring selling season and on orders from a small number of large retail customers, so results from big-box home and garden retailers are relevant to Scotts. Trading tied to cannabis has faded now that Hawthorne is reported as a discontinued operation. Interest rates matter through the debt load, with net leverage at 3.89 times at fiscal year-end.