It's Just The Beginning For Scotts Miracle-Gro Company
Oct. 5.16 | About: The Scotts (SMG)
Austin Bitzas
Austin Bitzas
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Long/short equity, value, growth, mid-cap
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Summary
Great company with stockholder friendly policies.
Recent interest in Hydroponic and liquid solutions focused on the cannabis industry.
Management’s positioning for company long-term profit and operating margin growth.
Company Description:
Scott's Miracle Gro Company (NYSE:SMG) is the largest marketer of branded consumer lawn and garden products. The company is headquartered out of Marysville, Ohio, where its founder began selling lawn seed in 1868. As industry leader SMG manufactures, markets, and sells consumer lawn and garden products worldwide. SMG is broken into two segments: Global Consumer division and Scotts Lawn Service segment. The Global Consumer division offers a variety of lawn and garden products for consumer's homes and maintenance of the external areas of a home. Under SMG's Lawn Service segment the company offers residential and commercial lawn care, tree care, shrub care, and pest control services. The company primarily distributes through home improvement centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, food and drug stores, and indoor gardening and hydroponic stores through a direct sales force and a network of brokers and distributers.
Company Potential:
Management has positioned the company for long-term profit growth over the next 12-18 months. The company has made some key strategic acquisitions, including a joint venture with TruGreen less than a year ago. The two largest companies in the lawn care market segment have now joined forces to accelerate revenue gains, and customer growth. Further, a little over a year ago SMG acquired General Hydroponics Inc. for $120 million. and Vermicrop for $15 million. This acquisition gave SMG access through the company's Global Consumer division to the growing indoor and urban gardening markets. SMG has also recently completed two more transactions with companies in the hydroponics industry. The first of these companies is Gavita, a Netherlands based company that SMG purchased a 75% stake in to acquire their market share as the leading global provider hydroponic equipment in the country. The second transaction involved SMG's acquisition of Bonicare, an Arizona based company that specializes in plant nutrients and hydroponic systems. SMG's management sees this as a long-term growth strategy in for the Global Consumer division since both of these companies are strong, well-run companies with high margins and excellent market positions. This transaction allows SMG to utilize both General Hydroponics and Vermicrop's standing as leading producers of liquid plant food products, growing median, and fixtures for hydroponic gardening.
Source/s:
http://www.otcmarkets.com/stock/SMG/news
http://seekingalpha.com/article/...ginning-scotts-miracle-gro-company |
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