Scotts Miracle Gro (SMG) Weak On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Scotts Miracle Gro ( SMG) as a weak on high relative volume 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 $24.5 million.
  • SMG has traded 53,481 shares today.
  • SMG is trading at 7.22 times the normal volume for the stock at this time of day.
  • SMG is trading at a new low 6.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SMG:

The Scotts Miracle-Gro Company is engaged in manufacturing, marketing, and selling consumer lawn and garden care products. The stock currently has a dividend yield of 3%. SMG has a PE ratio of 23.0. Currently there are 3 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 309,900 shares per day over the past 30 days. Scotts Miracle Gro has a market cap of $3.7 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.91 and a short float of 2.9% with 2.56 days to cover. Shares are down 1.9% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Scotts Miracle Gro as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SCOTTS MIRACLE-GRO CO's earnings per share declined by 18.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SCOTTS MIRACLE-GRO CO increased its bottom line by earning $2.54 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $2.54).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, SCOTTS MIRACLE-GRO CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 39.10% is the gross profit margin for SCOTTS MIRACLE-GRO CO which we consider to be strong. Regardless of SMG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.90% trails the industry average.
  • SMG, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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