Financial Contrast: Scotts Miracle-Gro Company (The) (SMG) and Potash Corporation of Saskatchewan (POT)

Scotts Miracle-Gro Company (The) (NYSE: SMG) and Potash Corporation of Saskatchewan (NYSE:POT) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, dividends, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Scotts Miracle-Gro Company (The) and Potash Corporation of Saskatchewan, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scotts Miracle-Gro Company (The) 0 2 2 0 2.50
Potash Corporation of Saskatchewan 1 8 6 0 2.33

Scotts Miracle-Gro Company (The) presently has a consensus target price of $100.00, suggesting a potential upside of 4.85%. Potash Corporation of Saskatchewan has a consensus target price of $18.05, suggesting a potential downside of 3.66%. Given Scotts Miracle-Gro Company (The)’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Scotts Miracle-Gro Company (The) is more favorable than Potash Corporation of Saskatchewan.

Valuation & Earnings

This table compares Scotts Miracle-Gro Company (The) and Potash Corporation of Saskatchewan’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Scotts Miracle-Gro Company (The) $2.93 billion 1.90 $517.80 million $3.81 25.03
Potash Corporation of Saskatchewan $3.89 billion 4.05 $1.25 billion $0.59 31.76

Potash Corporation of Saskatchewan has higher revenue and earnings than Scotts Miracle-Gro Company (The). Scotts Miracle-Gro Company (The) is trading at a lower price-to-earnings ratio than Potash Corporation of Saskatchewan, indicating that it is currently the more affordable of the two stocks.

Dividends

Scotts Miracle-Gro Company (The) pays an annual dividend of $2.12 per share and has a dividend yield of 2.2%. Potash Corporation of Saskatchewan pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Scotts Miracle-Gro Company (The) pays out 55.6% of its earnings in the form of a dividend. Potash Corporation of Saskatchewan pays out 67.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Potash Corporation of Saskatchewan has raised its dividend for 7 consecutive years. Scotts Miracle-Gro Company (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Scotts Miracle-Gro Company (The) has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500. Comparatively, Potash Corporation of Saskatchewan has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Profitability

This table compares Scotts Miracle-Gro Company (The) and Potash Corporation of Saskatchewan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Scotts Miracle-Gro Company (The) 7.85% 36.28% 7.67%
Potash Corporation of Saskatchewan 11.07% 5.19% 2.48%

Insider and Institutional Ownership

69.0% of Scotts Miracle-Gro Company (The) shares are held by institutional investors. Comparatively, 57.0% of Potash Corporation of Saskatchewan shares are held by institutional investors. 28.2% of Scotts Miracle-Gro Company (The) shares are held by company insiders. Comparatively, 3.1% of Potash Corporation of Saskatchewan shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Scotts Miracle-Gro Company (The) beats Potash Corporation of Saskatchewan on 9 of the 17 factors compared between the two stocks.

Scotts Miracle-Gro Company (The) Company Profile

The Scotts Miracle-Gro Company (Scotts Miracle-Gro) is a manufacturer and marketer of branded consumer lawn and garden products. The Company’s segments include Global Consumer. In North America, its brands include Scotts and Turf Builder lawn and grass seed products; Miracle-Gro, Nature’s Care, Scotts, LiquaFeed and Osmocote gardening and landscape products; and Ortho, Roundup, Home Defense and Tomcat branded insect control, weed control and rodent control products. In the United Kingdom, its brands include Miracle-Gro plant fertilizers; Roundup, Weedol and Pathclear herbicides; EverGreen lawn fertilizers, and Levington gardening and landscape products.

Potash Corporation of Saskatchewan Company Profile

Potash Corporation of Saskatchewan Inc. (PCS) is a fertilizer producer producing a range of primary crop nutrients, such as potash, nitrogen and phosphate. The Company operates through three segments: potash, nitrogen and phosphate. As of December 31, 2016, it owned and operated five potash operations in Saskatchewan and owned one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. Its phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. As of December 31, 2016, the Company had four phosphate feed plants in the United States.

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