Financial Review: Adecoagro (NYSE:AGRO) versus Scotts Miracle-Gro (NYSE:SMG)

Adecoagro (NYSE:AGRO) and Scotts Miracle-Gro (NYSE:SMG) are both consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Dividends

Adecoagro pays an annual dividend of $0.35 per share and has a dividend yield of 3.9%. Scotts Miracle-Gro pays an annual dividend of $2.64 per share and has a dividend yield of 4.0%. Adecoagro pays out 56.5% of its earnings in the form of a dividend. Scotts Miracle-Gro pays out 528.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Adecoagro has raised its dividend for 3 consecutive years.

Volatility and Risk

Adecoagro has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Scotts Miracle-Gro has a beta of 1.99, suggesting that its stock price is 99% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Adecoagro and Scotts Miracle-Gro, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adecoagro	2	2	0	0	1.50
Scotts Miracle-Gro	0	2	4	0	2.67

Adecoagro presently has a consensus price target of $10.55, indicating a potential upside of 16.25%. Scotts Miracle-Gro has a consensus price target of $67.67, indicating a potential upside of 2.74%. Given Adecoagro’s higher probable upside, equities research analysts clearly believe Adecoagro is more favorable than Scotts Miracle-Gro.

Valuation and Earnings

This table compares Adecoagro and Scotts Miracle-Gro”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adecoagro	$1.52 billion	0.60	$92.34 million	$0.62	14.64
Scotts Miracle-Gro	$3.55 billion	1.07	-$34.90 million	$0.50	131.73

Adecoagro has higher earnings, but lower revenue than Scotts Miracle-Gro. Adecoagro is trading at a lower price-to-earnings ratio than Scotts Miracle-Gro, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Adecoagro and Scotts Miracle-Gro’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adecoagro	3.97%	11.60%	5.15%
Scotts Miracle-Gro	1.04%	-56.15%	5.61%

Insider and Institutional Ownership

45.3% of Adecoagro shares are owned by institutional investors. Comparatively, 74.1% of Scotts Miracle-Gro shares are owned by institutional investors. 6.7% of Adecoagro shares are owned by insiders. Comparatively, 25.4% of Scotts Miracle-Gro shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Scotts Miracle-Gro beats Adecoagro on 10 of the 17 factors compared between the two stocks.

About Adecoagro

Adecoagro S.A. operates as an agro-industrial company in South America. The company mainly operates through three segments: Farming; Sugar, Ethanol and Energy; and Land Transformation. It engages in farming crops, rice and other agricultural products, dairy operations, and land transformation activities, as well as sugar, ethanol, and energy production activities. The company is involved in the planting, harvesting, and sale of grains, oilseeds, and fibers, including wheat, corn, soybeans, peanuts, cotton, sunflowers, and others; provision of grain warehousing/conditioning, handling, and drying services to third parties; and purchase and sale of crops produced by third parties. It also plants, harvests, processes, and markets rice; and produces and sells raw milk, UHT, cheese, and powder milk. In addition, the company engages in the cultivating and transforming of sugarcane into ethanol, sugar, and electricity. Further, it is involved in the identification and acquisition of underdeveloped and undermanaged farmland, and the realization of value through the strategic disposition of assets. Adecoagro S.A. was founded in 2002 and is based in Luxembourg, Luxembourg.

About Scotts Miracle-Gro

The Scotts Miracle-Gro Company, together with its subsidiaries, manufactures, markets, and sells products for lawn, garden care, and indoor and hydroponic gardening in the United States and internationally. It operates through three segments: U.S. Consumer, Hawthorne, and Other. The company provides lawn care products, comprising lawn fertilizers, grass seed products, spreaders, and other durable products, as well as lawn-related weed, pest, and disease control products; and gardening and landscape products, which include water-soluble and continuous-release plant foods, potting mixes, garden soils, mulches and ground cover products, plant-related pest and disease control products, organic garden products, and live goods and seeding solutions. It offers hydroponic products that help users to grow plants, flowers, and vegetables using little or no soil; lighting systems and components for use in hydroponic and indoor gardening applications; insect, rodent, and weed control products for home areas; and non-selective weed killer products. The company sells its products under the Scotts, Turf Builder, EZ Seed, PatchMaster, Thick'R Lawn, GrubEx, EdgeGuard, Handy Green II, Miracle-Gro, LiquaFeed, Shake N Feed, Hyponex, Earthgro, Nature Scapes, Ortho, Miracle-Gro Performance Organics, Miracle-Gro Organic Choice, Whitney Farms, EcoScraps, Mother Earth, Botanicare, General Hydroponics, Cyco, Gavita, Agrolux, HydroLogic Purification System, Gro Pro, AeroGarden, Titan, Tomcat, Ortho Weed B Gon, Roundup, Groundclear, and Alchemist brands. It serves home centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, e-commerce platforms, and food and drug stores, as well as indoor gardening and hydroponic distributors, retailers, and growers. The Scotts Miracle-Gro Company was founded in 1868 and is headquartered in Marysville, Ohio.