The Scotts Miracle-Gro Company (NYSE:SMG), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let's take a look at Scotts Miracle-Gro's outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Scotts Miracle-Gro
Is Scotts Miracle-Gro Still Cheap?
The stock is currently trading at US$55.30 on the share market, which means it is overvalued by 39% compared to my intrinsic value of $39.66. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Scotts Miracle-Gro's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Scotts Miracle-Gro look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted revenue growth of 9.4% expected over the next couple of years, growth doesn't seem like a key driver for a buy decision for Scotts Miracle-Gro, at least in the short term.
What This Means For You
Are you a shareholder? SMG's future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SMG should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, 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 best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the positive outlook means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Scotts Miracle-Gro, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Scotts Miracle-Gro (of which 1 is concerning!) you should know about.
If you are no longer interested in Scotts Miracle-Gro, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.