Scotts Miracle-Gro is the world’s leading supplier and marketer of do-it-yourself lawn and garden products and is located in Marysville, Ohio. Although Scotts dominates many of its chosen markets, its profit margins are mediocre. Use the following information on Scotts and five other similar companies to value Scotts’s common stock on November 1, 2007.
Scotts Miracle-Gro ($ millions) | |
Net income | $ 113.4 |
Number of common shares (millions) | 63.9 |
Earnings before interest and tax | $ 156 |
Tax rate | 40% |
Book value of equity | $ 479.3 |
Book value interest-bearing debt | $1,118 |
| Scotts Miracle-Gro | Central Garden & Pet | Energizer Holdings | Fortune Brands | Kimberly Clark | Newell Rubber-maid |
Comparison of Scotts Miracle-Gro with Comparable Companies: | ||||||
5-year growth rate in sales (%) | 9.8 | 9.2 | 14.1 | 8.5 | 6.1 | (3.0) |
5-year growth rate in eps (%) | 6.1 | (20.2) | 21.1 | 9.5 | 5.1 | 3.1 |
Analysts' projected growth (%) | 10.3 | NA | 13.5 | 9.0 | 7.5 | 9.3 |
Interest coverage ratio (X) | 2.7 | 2.1 | 5.8 | 4.7 | 11.5 | 6.5 |
Total liabilities to assets (X) | 0.79 | 0.53 | 0.82 | 0.65 | 0.73 | 0.67 |
Total assets ($ millions) | 2,277 | 1,647 | 3,553 | 15,055 | 18,324 | 6,591 |
Indicators of Value | ||||||
Price/earnings (X) |
| 19.5 | 20.1 | 15.8 | 16.7 | 16.0 |
MV firm/EBIT(1 – Tax rate) (X) |
| 7.6 | 11.2 | 9.1 | 10.4 | 10.6 |
Price/earnings (X) |
| 21.5 | 19.1 | 15.3 | 16.8 | 16.9 |
MV firm/EBIT(1 – Tax rate) (X) |
| 18.2 | 20.2 | 17.1 | 16.5 | 17.8 |
MV equity/sales (X) |
| 0.3 | 1.8 | 1.6 | 1.6 | 1.2 |
MV firm/sales (X) |
| 0.7 | 2.3 | 2.2 | 2.0 | 1.6 |
MV equity/BV equity (X) |
| 0.7 | 9.5 | 2.4 | 5.9 | 3.6 |
MV firm/BV firm (X) |
| 0.7 | 2.2 | 1.2 | 1.9 | 1.5 |
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