In This Article:
If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term The Scotts Miracle-Gro Company (NYSE:SMG) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 57% in that time. Unfortunately the share price momentum is still quite negative, with prices down 8.5% in thirty days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
If the past week is anything to go by, investor sentiment for Scotts Miracle-Gro isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Check out our latest analysis for Scotts Miracle-Gro
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
We know that Scotts Miracle-Gro has been profitable in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics may better explain the share price move.
We think that the revenue decline over three years, at a rate of 12% per year, probably had some shareholders looking to sell. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Scotts Miracle-Gro's financial health with this free report on its balance sheet.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Scotts Miracle-Gro's TSR for the last 3 years was -51%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Scotts Miracle-Gro provided a TSR of 16% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 4% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Scotts Miracle-Gro better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Scotts Miracle-Gro you should be aware of, and 1 of them is potentially serious.