Investment Thesis
Scotts Miracle-Gro faces severe financial distress with negative stockholders equity of -$286.5M, negative operating cash flow of -$150.4M, and minimal cash reserves of $6.2M against $2.1B in debt. The company is technically insolvent and unsustainably burning cash despite reasonable operating margins, creating acute refinancing and liquidity risk.
Strengths
- Gross margin of 38.5% indicates underlying product profitability
- Operating margin of 20.9% shows cost control in core operations
- Interest coverage ratio of 6.5x suggests current debt service capability
Risks
- Negative stockholders equity of -$286.5M indicates technical insolvency with liabilities exceeding assets
- Negative operating cash flow of -$150.4M demonstrates the company cannot fund operations from internal sources
- Critical liquidity crisis: only $6.2M cash against $2.1B long-term debt and total liabilities of $3.7B
- Revenue declining 3.9% YoY while burning cash unsustainably
- Quick ratio of 0.73x signals potential inability to meet short-term obligations
- Free cash flow of -$189.0M creates severe refinancing risk and limits financial flexibility
Key Metrics to Watch
- Operating cash flow trend - must turn positive for viability
- Cash balance trajectory - at critical levels
- Debt refinancing ability - with negative equity, refinancing risk is acute
- Revenue stabilization - need to reverse declining sales trend
Financial Metrics
Revenue
1.8B
Net Income
113.6M
EPS (Diluted)
$1.93
Free Cash Flow
-189.0M
Total Assets
3.4B
Cash
6.2M
Profitability Ratios
Gross Margin
38.5%
Operating Margin
20.9%
Net Margin
6.3%
ROE
N/A
ROA
3.3%
FCF Margin
-10.4%
Balance Sheet & Liquidity
Current Ratio
1.27x
Quick Ratio
0.73x
Debt/Equity
N/A
Debt/Assets
108.4%
Interest Coverage
6.50x
Long-term Debt
2.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T07:14:59.051122 |
Data as of: 2026-03-28 |
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