Recent commentary on the expanding global urban gardening products market has turned attention to Scotts Miracle-Gro (SMG). The stock sits at about $61.35 as investors weigh how compact urban living and sustainability trends might influence demand.

For context, Scotts Miracle-Gro’s recent 1 month share price return is down 12.18%, even though the 3 month share price return is up 1.44%. The 1 year total shareholder return of 3.12% comes after a 5 year total shareholder return decline of 52.40%, which suggests momentum has been fragile despite growing interest in urban gardening themes.

Scan beyond Scotts Miracle-Gro and size up other gardening and home improvement stocks that combine demand for sustainable living with solid fundamentals using our curated list of solid balance sheet and fundamentals (51 results).

Scotts Miracle-Gro has a long-established business and exposure to fast growing urban gardening themes, yet the stock recently eased back to about $61.35. Does that price fairly reflect what investors are getting today?

Most Popular Narrative: 18.7% Undervalued

Compared with Scotts Miracle-Gro's last close at about $61.35, the most followed narrative points to a fair value of $75.50, suggesting a meaningful valuation gap that hinges on execution in its core gardening and hydroponics businesses.

Significant ongoing investments in supply chain technology, automation, and process efficiencies are unlocking ~$75 million in cost savings for fiscal '25 and another ~$75 million planned for '26/'27, directly driving gross margin recovery (aiming for 35%+), boosting EBITDA, and improving long-term net margins.

Want to see what turns those planned cost savings into a higher fair value for Scotts Miracle-Gro? The narrative leans heavily on margin recovery, a step change in earnings, and a future earnings multiple that contrasts sharply with where the stock trades today.

Result: Fair Value of $75.50 (UNDERVALUED)

However, you still need to weigh real risks for Scotts Miracle-Gro, including tighter environmental rules on chemicals and any pullback in orders from major retail partners.

Another View Using Earnings Multiples

The 18.7% undervaluation figure for Scotts Miracle-Gro is based on future cash flows. Looking at the current P/E of 23.1x presents a different perspective. It is higher than peer averages at 18.2x and above a fair ratio of 19.9x, which suggests some valuation risk if expectations cool.

For your own cross check, it helps to see how that P/E relationship compares across the sector and how the market might adjust if it moves toward the fair ratio over time. See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mixed signals around Scotts Miracle-Gro, it makes sense to review the full picture yourself and move quickly while sentiment is split. To help with that, start with the 4 key rewards and 3 important warning signs.

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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.