Scotts Miracle-Gro Company faces financial challenges and investor skepticism in vertical farming sector

From Yahoo Finance: 2025-04-08 18:03:00

The global hydroponics market is projected to reach $25.1 billion by 2027, while vertical farming is forecasted to grow to $50.1 billion by 2032. Despite this growth potential, some companies in the sector face challenges like high operational costs and financial instability due to rising input costs and energy consumption.

Regulatory uncertainty and oversupply in the cannabis market have impacted the hydroponics sector, while the higher price points of vertically farmed produce compared to traditional agriculture pose challenges in market reach. Additionally, supply chain disruptions post-COVID-19 have affected vertical farming operations, making it hard to scale efficiently.

Investor sentiment towards capital-intensive agritech ventures is changing, with hedge funds showing skepticism in companies lacking sustainable business models. The Scotts Miracle-Gro Company (SMG) faces financial challenges, declining sales in its Hawthorne division, increasing debt, and a reliance on promotional spending for growth, leading to significant stock underperformance.

Despite attempts to improve profitability and cut costs, SMG’s financial stability remains a concern, with a leverage ratio of 4.52 times net debt to EBITDA. The company’s dependence on costly promotions and a slow recovery in core product demand contribute to its ranking as one of the worst agriculture stocks to buy, with a YTD stock decline of over 20%.

SMG ranks 1st on the list of worst vertical farming and hydroponic stocks to buy due to structural challenges and investor skepticism. While SMG has potential, AI stocks offer higher returns within a shorter timeframe. An AI stock that increased in 2025 while popular AI stocks declined by 25% may be a more promising investment option.



Read more at Yahoo Finance: Is The Scotts Miracle-Gro Company (SMG) the Worst Vertical Farming and Hydroponic Stock to Buy?