| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 41.60 | -35 |
| Intrinsic value (DCF) | 29.36 | -54 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
The Scotts Miracle-Gro Company (LSE: 0L45.L) is a leading manufacturer and marketer of lawn, garden care, and hydroponic gardening products, serving both residential and commercial markets in the U.S. and internationally. Founded in 1868 and headquartered in Marysville, Ohio, the company operates through three key segments: U.S. Consumer, Hawthorne (hydroponics), and Other. Scotts Miracle-Gro offers a diverse portfolio of trusted brands, including Scotts, Miracle-Gro, Ortho, and Roundup, catering to lawn maintenance, gardening, and indoor hydroponic cultivation. The company distributes its products through home centers, mass merchandisers, e-commerce platforms, and specialty retailers, positioning itself as a dominant player in the basic materials sector. With a strong focus on innovation and sustainability, Scotts Miracle-Gro continues to expand its market share in organic and hydroponic gardening, capitalizing on growing consumer interest in home gardening and controlled-environment agriculture.
Scotts Miracle-Gro presents a mixed investment profile. The company benefits from strong brand recognition, a diversified product portfolio, and a growing hydroponics segment (Hawthorne), which aligns with increasing demand for indoor gardening solutions. However, investors should note the company's negative net income (-$34.9M) and high leverage (total debt of $2.52B), which could pose risks amid rising interest rates. The stock's high beta (1.954) suggests significant volatility, likely tied to cyclical demand for lawn and garden products. Positive operating cash flow ($667.5M) and a solid dividend yield (~3.5%) may appeal to income-focused investors, but the hydroponics segment faces regulatory uncertainties and competition. The stock could suit investors with a higher risk tolerance seeking exposure to the home improvement and cannabis-adjacent markets.
Scotts Miracle-Gro holds a competitive advantage through its extensive brand portfolio and distribution network, which includes partnerships with major retailers like Home Depot and Lowe's. Its U.S. Consumer segment dominates the lawn and garden care market, with brands like Miracle-Gro and Ortho enjoying strong customer loyalty. The Hawthorne segment positions the company in the high-growth hydroponics market, though this space is fragmented and subject to regulatory risks. Competitors challenge Scotts in specific niches: Spectrum Brands in pest control, Central Garden & Pet in value-tier lawn products, and Hydrofarm in hydroponics. Scotts' scale allows for robust R&D and marketing spend, but its reliance on seasonal demand and exposure to input cost inflation (e.g., fertilizers) are vulnerabilities. The company's shift toward organic and sustainable products (e.g., Miracle-Gro Performance Organics) helps differentiate it from low-cost competitors. However, its debt load could limit agility in responding to market shifts compared to leaner rivals.