NEW YORK (TheStreet) -- Scotts Miracle-Gro Co. (SMG) stock is down -1.90% to $58.93 in early trading on Thursday.
The lawn and garden company had its stock rating downgraded by BMO Capital Markets (BMO) to "outperform" from "market perform."
BMO Capital also reduced its fiscal year 2014 estimate by 10 cents to $3.30, citing the season's poor weather conditions which hurt sales.
The firm's fiscal year 2015 estimate is lowered by 5 cents to $3.60.
Separately, TheStreet Ratings team rates SCOTTS MIRACLE-GRO CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCOTTS MIRACLE-GRO CO (SMG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 25.78% and other important driving factors, this stock has surged by 33.23% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- SCOTTS MIRACLE-GRO CO has improved earnings per share by 25.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SCOTTS MIRACLE-GRO CO increased its bottom line by earning $2.55 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.55).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Chemicals industry average, but is less than that of the S&P 500. The net income increased by 25.7% when compared to the same quarter one year prior, rising from $100.00 million to $125.70 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 7.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Chemicals industry and the overall market, SCOTTS MIRACLE-GRO CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: SMG Ratings Report