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The Scotts Miracle-Gro Company (NYSE:SMG), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$81.73 at one point, and dropping to the lows of US$58.58. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Scotts Miracle-Gro's current trading price of US$58.58 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Scotts Miracle-Gro’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Scotts Miracle-Gro
Is Scotts Miracle-Gro Still Cheap?
According to our valuation model, Scotts Miracle-Gro seems to be fairly priced at around 17% below our intrinsic value, which means if you buy Scotts Miracle-Gro today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $70.31, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Scotts Miracle-Gro generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted revenue growth of 5.7% 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 around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?