Product and Service
Companies included in lawn& garden products sector in household goods& service industry primarily are manufacturers and marketers of lawn& garden products.
Demand for Product and Service
As indicated by typical sales data, the demand for lawn and garden seems to being declining in the past two years while the demand has been solid. It is probably a result of increased selling price (less promotion/rebate). However, it is more likely to be due to declining demand.
The Sector
Sector’s current, trend, causes behind trend, and future
Current and Trend
- Generally, the demand for lawn and garden products has been solid but presented downward trend in the past two years as indicated by the typical company’s data of sales volume. The downward trend seems more apparent in the sale of garden related and indoor planting related product.
- The declining materials costs seem giving more space to companies in this industry to lower the price of their products.
- We have seen increasing consolidation activities in the recent years.
Causes behind the trend
Considering increasing industry concentration, the current pressure of sales may be a reflection of decreasing demand, which has probably been related to general economic and demographic changes, growth in household income, and change in housing market.
Industry Future
Downward trend in this sector may not be able to make a quick turn considering the current situation in economy and housing market.
Numbers
General Financial Performance of Companies In the Sector
It seems that demand for garden products started to decline since 2016. This has been reflected by the decreasing sale volume (primarily garden related products) during this period. In addition, demand for products for indoor planting has also been declining.
However, we have seen decreasing materials costs and less rebates since 2015, which resulted in improved gross margin (about 36% in 2017). The typical operating margin went up to about 16% with a SG&A as percentage of sales of about 21%.
The typical average stock Price/cash flow ratio is: 23(interest/EBI ratio of 27%) and stock price/sales ratio is about 1.8.
