Watch Out: Barbarians At The Gate For Scotts Miracle Gro (SMG)
Trade-Ideas LLC identified Scotts Miracle Gro ( SMG) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Scotts Miracle Gro as such a stock due to the following factors:
- SMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.1 million.
- SMG has traded 305,454 shares today.
- SMG traded in a range 212.1% of the normal price range with a price range of $2.02.
- SMG traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on SMG: The Scotts Miracle-Gro Company manufactures, markets, and sells consumer lawn and garden products worldwide. The stock currently has a dividend yield of 2.6%. SMG has a PE ratio of 28. Currently there are 2 analysts that rate Scotts Miracle Gro a buy, 1 analyst rates it a sell, and 4 rate it a hold. The average volume for Scotts Miracle Gro has been 365,600 shares per day over the past 30 days. Scotts Miracle Gro has a market cap of $4.4 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.52 and a short float of 1.9% with 3.20 days to cover. Shares are up 9.7% year-to-date as of the close of trading on Friday.
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Analysis:
rates Scotts Miracle Gro as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 13.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SCOTTS MIRACLE-GRO CO's earnings per share declined by 7.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SCOTTS MIRACLE-GRO CO reported lower earnings of $2.54 versus $2.63 in the prior year. This year, the market expects an improvement in earnings ($3.90 versus $2.54).
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from -$74.60 million to -$81.30 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- Net operating cash flow has decreased to -$338.60 million or 26.81% when compared to the same quarter last year. Despite a decrease in cash flow of 26.81%, SCOTTS MIRACLE-GRO CO is in line with the industry average cash flow growth rate of -29.70%.
- You can view the full Scotts Miracle Gro Ratings Report.
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