Sector financial performance:

This company, primarily a manufacturer and marketer of lawn and garden products, has been grouped into lawn and garden sector in household goods& service industry.

It seems that demand for garden products started to decline since 2016. This has been reflected by the decreasing sale volume (primarily garden related products) during this period. In addition, demand for products for indoor planting has also been declining.  

However, we have seen decreasing materials costs and less rebates since 2015, which resulted in improved gross margin (about 36% in 2017). The typical operating margin went up to about 16% with a SG&A as percentage of sales of about 21%.

The typical average stock Price/cash flow ratio is: 23(interest/EBI ratio of 27%) and stock price/sales ratio is about 1.8.

                                                                                  click for more about this industry

Company performance:

It seems that the demand for products of this company in the past several years has been declining as indicated by the continuingly decreasing growth in sales volume, which entered into negative area since 2016. As a result of increased consumer rebate, the selling price also declined.

The first three months of fiscal 2018 compared with the same period of 2017

Organic sales (excluding currency& acquisition) decreased 7.5 % primarily due to decrease of 6.6% in sales volume and decrease of 0.9% in average price.

The fiscal 2017 compared with 2016

Organic sales (excluding currency& acquisition) decreased 0.3% primarily due to decrease of 1.4% in sales volume offset by increase of 1.1% in average price.

Fiscal 2016 compared with 2015

Organic sales (excluding currency& acquisition) increased 3.4% primarily due to increase of 2.8% in sales volume and increase of 0.6% in average price.

Fiscal 2015 compared with 2014

Organic sales (excluding currency& acquisition) increased 4% primarily due to increase of 4.4% in sales volume offset by decrease of 0.4% in average price.

Its gross margin has increased from around 34% in 2015 up to about 36% of 2017 due to lower materials costs and raised selling price. Its operating margin thus increased to about 16% in 2017 with a SG&A as percentage of sales of about 21% (flat).

Stock price

This stock currently has a stock price/cash flow ratio of 23 ($84). We think that its stock is being relatively overvalued considering the declining sales volume and uncertainty in profitability.