8 Worst Small Cap Agriculture Stocks to Buy

3. The Scotts Miracle-Gro Company (NYSE:SMG)

Number of Hedge Fund Holders: 33

% of Short Float: 7.53%

The Scotts Miracle-Gro Company (NYSE:SMG) is a leading supplier of lawn, garden, and hydroponic products in the United States, operating via three segments: Consumer, Hawthorne, and Other. While the company’s brand recognition remains strong, it has suffered from diminishing demand in its hydroponics industry and continuous financial challenges. It is among the worst agriculture stocks to monitor.

The Scotts Miracle-Gro Company (NYSE:SMG) reported a GAAP net loss of $69.5 million, or $1.21 per share, for the first quarter of fiscal year 2025, which ended December 28, 2024. This is an improvement over the previous year’s loss of $80.5 million but still reflects operational issues. Despite a modest gain in US consumer sales to $341 million, the Hawthorne segment, which specializes in hydroponics, had a 35% revenue decline to $52 million. The company also reported a large increase in SG&A spending, which rose 9% year-on-year, owing to increased media and technological investments. While adjusted EBITDA increased to $3.8 million from a deficit of $25.8 million, overall profitability remained under pressure.

In addition, The Scotts Miracle-Gro Company (NYSE:SMG) continues to have balance-sheet issues, with a leverage ratio of 4.52x net debt to adjusted EBITDA, which remains high despite a year-over-year decline. The company also paid $21.7 million in restructuring and impairment costs, which included staff severance pay and losses from its investment in RIV Capital. Furthermore, its seasonal cash flow utilization amounted to $475 million, adding to debt-related issues.

Despite cost-cutting strategies aimed at achieving $75 million in yearly supply chain reductions, the company’s reliance on strong spring and summer sales remains a concern. With macroeconomic uncertainties and unfavorable hydroponic market circumstances, The Scotts Miracle-Gro Company (NYSE:SMG) has struggled to maintain long-term profitability. These problems have dragged on investor confidence, resulting in a 20.2% year-to-date stock fall as of the writing of this piece, making it one of the worst-performing small-cap agriculture stocks in the industry.