Scotts Miracle-Gro (SMG) is On Target, It's the Street Who's Wrong - Cramer

Shares of Scotts Miracle-Gro (NYSE: SMG) are trading higher Thursday as investors may be reacting to CEO Jim Hagedorn sitting down with TV personality Jim Cramer. Scotts reported a first-quarter earnings beat to the tune of 9 cents per share with lighter revs. Shares dropped about 16 percent Tuesday.

Hagedorn said the rapid and sharp dip in shares resulted from analysts getting ahead of where the company should be. In terms of meeting its own internal expectations for growth, Scotts is spot-on; the same can't be said for Street expectations.

Hagedorn believes when the economy is rolling, the lawn-and-garden segment can help companies beat even the most stingy of views. With its well-established supply chain, Hagedorn said the company is still stressed in the spring and summer months and supply and demand race ahead, neck-and-neck.

For 2012, Hagedorn said Scotts will not be raising prices due to the string of bad weather hampering sales last year. The aim is to take market share through unit volume and advertising. Hagedorn assured Cramer that Scotts has hedged expected costs, with price increases expected in 2013 to firm margins.

Cramer is still bullish on Scotts, saying the Street misunderstood the actually strong numbers.

Shares of Scotts are 2.7 percent better in Thursday trade.

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