Yahoo Finance When Should You Buy The Scotts Miracle-Gro Company (NYSE:SMG)?
The Scotts Miracle-Gro Company (NYSE:SMG), which is in the chemicals business, and is based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Scotts Miracle-Gro’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Scotts Miracle-Gro
What is Scotts Miracle-Gro worth?
According to my valuation model, Scotts Miracle-Gro seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Scotts Miracle-Gro today, you’d be paying a fair price for it. And if you believe the company’s true value is $117.97, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Scotts Miracle-Gro has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Scotts Miracle-Gro?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Scotts Miracle-Gro, at least in the near future.
What this means for you:
Are you a shareholder? SMG seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on SMG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on SMG should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Scotts Miracle-Gro. You can find everything you need to know about Scotts Miracle-Gro in the latest infographic research report. If you are no longer interested in Scotts Miracle-Gro, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
