In this article, we will discuss the 5 largest pest control companies in USA. If you want to see more companies in this selection, go to the 16 Largest Pest Control Companies in USA.
5. The Scotts Miracle-Gro Company (NYSE:SMG)
Market Capitalization: $4.175 billion
The Scotts Miracle-Gro Company (NYSE:SMG) is a Marysville, Ohio-based provider of gardening and pest control products founded by Horace Hagedorn in 1951.
Ortho, RoundUp, and Tomcat are some of the brands leading the pest and weed control segment of the business. The Scotts Miracle-Gro Company (NYSE:SMG) is renowned for its comprehensive approach towards addressing the requirements of gardeners and farmers. The company’s R&D department is the largest in the world and is exclusively committed to developing products for lawns, gardens, and hydroponic cultivation. With over 100 scientists from diverse fields such as soil science and molecular biology and more than 900 acres of land in three states, The Scotts Miracle-Gro Company (NYSE:SMG) cultivates a wide variety of plants ranging from tomatoes to turfgrass.
Madison Funds shared its outlook on The Scotts Miracle-Gro Company (NYSE:SMG) in its Q4 2022 investor letter. Here’s what the firm said:
“Stock selection was the poorest for us in this sector. Two stocks in particular – Hain Celestial (HAIN) and The Scotts Miracle-Gro Company (NYSE:SMG) – while big winners for us in 2020 and 2021, hurt the portfolio in 2022.
While both companies were so-called COVID beneficiaries (businesses that benefited from consumers staying home and spending on their homes during COVID), we felt they possessed certain additional drivers that would maintain their fundamentals into 2022 and beyond.
Scott’s Miracle-Gro is arguably one of the great American franchises. The brand is synonymous with lawn care and pest control, has a dominant market share (~60%) with historically-impressive ~30% cash flow margins, and has the country’s largest Cannabis supply business. Scotts’ core business saw a significant windfall during COVID lockdowns. Lawn and garden care is not a growth business, and SMG dominance does not allow for much incremental gain in market share. However, our thesis was that even in a reopening scenario where lawn and garden businesses would revert to the mean, the cannabis market was poised for years of growth as more states legalized recreational use.
What we missed was the highly inefficient structure of the U.S. cannabis market. Currently, California, Colorado, and Michigan have the biggest and most mature markets. However, over the course of the last few years, several very large states and regions have voted to legalize recreational use, including New York, New Jersey, and Connecticut. The fly in the ointment has been Oklahoma, which is a medical marijuana state. Although recreational use is still prohibited, licenses to grow the crop were granted in Laissez Faire fashion to anyone willing to buy one. Oklahoma began to grow and cultivate the crop far in excess of their medical marijuana demand. That excess supply bled into grey markets across the country, devastating pricing for growers in other states. This glut put a near complete stop to capital spending on grow operations. With no new or incremental facilities coming on, Scotts’ Hawthorne business was cut in half from its peak in F21. This, of course, had a devastating effect on the stock.”
