Critical Analysis: Olin (NYSE:OLN) versus Scotts Miracle-Gro (NYSE:SMG)

Scotts Miracle-Gro (NYSE:SMG) and Olin (NYSE:OLN) are both materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Scotts Miracle-Gro	$3.48 billion	0.94	$145.20 million	$1.15	48.80
Olin	$6.70 billion	0.25	-$100.50 million	($1.23)	-12.04

Scotts Miracle-Gro has higher earnings, but lower revenue than Olin. Olin 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.

Dividends

Scotts Miracle-Gro pays an annual dividend of $2.64 per share and has a dividend yield of 4.7%. Olin pays an annual dividend of $0.80 per share and has a dividend yield of 5.4%. Scotts Miracle-Gro pays out 229.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Olin pays out -65.0% of its earnings in the form of a dividend. Olin is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Scotts Miracle-Gro has a beta of 1.87, indicating that its share price is 87% more volatile than the S&P 500. Comparatively, Olin has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Scotts Miracle-Gro and Olin, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Scotts Miracle-Gro	0	2	4	0	2.67
Olin	3	12	1	0	1.88

Scotts Miracle-Gro currently has a consensus price target of $70.20, indicating a potential upside of 25.08%. Olin has a consensus price target of $20.07, indicating a potential upside of 35.48%. Given Olin’s higher probable upside, analysts plainly believe Olin is more favorable than Scotts Miracle-Gro.

Institutional & Insider Ownership

74.1% of Scotts Miracle-Gro shares are held by institutional investors. Comparatively, 88.7% of Olin shares are held by institutional investors. 24.4% of Scotts Miracle-Gro shares are held by insiders. Comparatively, 1.6% of Olin shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Scotts Miracle-Gro	2.19%	-81.90%	8.97%
Olin	-2.08%	-4.76%	-1.17%

Summary

Scotts Miracle-Gro beats Olin on 10 of the 16 factors compared between the two stocks.

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.

About Olin

Olin Corporation manufactures and distributes chemical products in the United States, Europe, Asia Pacific, Latin America, and Canada. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The Chlor Alkali Products and Vinyls segment offers chlorine and caustic soda, ethylene dichloride and vinyl chloride monomers, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products, potassium hydroxide, and chlorinated organics intermediates and solvents. The Epoxy segment provides Allylics, such as allyl chloride, epichlorohydrin, and glycerin; aromatics, including acetone, bisphenol, cumene, and phenol; liquid and solid epoxy resins; and converted epoxy resins and additives. The Winchester segment offers sporting ammunition products, including shotshells, small caliber centerfire, and rimfire ammunition products for hunters and recreational shooters, and law enforcement agencies; small caliber military ammunition products for use in infantry and mounted weapons; and industrial products comprising gauge loads and powder-actuated tool loads for maintenance applications in power and concrete industries, and powder-actuated tools in construction industry. The company markets its products through its sales force, as well as directly to various industrial customers, mass merchants, retailers, wholesalers, gun clubs, other distributors, and the U.S. Government and its prime contractors. Olin Corporation was incorporated in 1892 and is based in Clayton, Missouri.