We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Does Central Garden & Pet Deserve a Place in Your Portfolio?
Read MoreHide Full Article
Central Garden & Pet Company (CENT - Free Report) has been gaining from its robust strategies, spectacular earnings history and solid brand portfolio. Moreover, the company intends to take a balanced approach that include improvement in revenues and profits through operational efficiency as well as cost reduction.
Let’s Dive Deep
Growth Drivers
Central Garden & Pet is revamping both its Pet and Garden segments. It also plans to launch several products that appeal to customers, along with upgrading its customer service. Management expects its ongoing transformation efforts to yield results in the near future. In fact, the company is expected to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels.
Evidently, the Pet and Garden segments reported revenue growth of 9.1% and 14.9% year over year, respectively, in the third quarter of fiscal 2017. Further, the company’s Pet segment recorded eighth straight quarter of organic sales growth primarily owing to robust consumer brands performance.
Markedly, being the leading producer of garden and pet supplies products in the United States with a diversified portfolio of brands has aided Central Garden & Pet in developing healthy commercial relationships with giant retailers such as Walmart Stores, Inc. (WMT - Free Report) , The Home Depot, Inc. (HD - Free Report) and Lowe's Companies, Inc. (LOW - Free Report) . We believe this provides the company significant opportunity to boost growth.
Solid Earnings History
Driven by its strategic efforts, Central Garden & Pet’s bottom line has outpaced the Zacks Consensus Estimate for 12 straight quarters now. In fact, the company has delivered an impressive average earnings beat of 122.2% in the trailing four quarters. Further, the company boasts a long-term earnings growth rate of 10%.
Impressive Gross Margin Trend
Gross margin – an important financial metrics – that gives an indication about the company’s health has shown constant improvement in the past five quarters. Improvement in gross margin can be attributed to the company’s efforts toward improving manufacturing efficiency and exit from the holiday decor business, which was hampering the margin. Further, margin gains result from lower raw material costs.
In the first, second and third quarters of fiscal 2017 gross margin expanded 110, 90 and 10 basis points to 28.8%, 32.2% and 31.9%, respectively.
Bottom Line
Though stiff competition and seasonality of garden business may strain its margins, we believe that these headwinds will be easily offset by Central Garden & Pet’s robust strategies.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Does Central Garden & Pet Deserve a Place in Your Portfolio?
Central Garden & Pet Company (CENT - Free Report) has been gaining from its robust strategies, spectacular earnings history and solid brand portfolio. Moreover, the company intends to take a balanced approach that include improvement in revenues and profits through operational efficiency as well as cost reduction.
Let’s Dive Deep
Growth Drivers
Central Garden & Pet is revamping both its Pet and Garden segments. It also plans to launch several products that appeal to customers, along with upgrading its customer service. Management expects its ongoing transformation efforts to yield results in the near future. In fact, the company is expected to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels.
Evidently, the Pet and Garden segments reported revenue growth of 9.1% and 14.9% year over year, respectively, in the third quarter of fiscal 2017. Further, the company’s Pet segment recorded eighth straight quarter of organic sales growth primarily owing to robust consumer brands performance.
Markedly, being the leading producer of garden and pet supplies products in the United States with a diversified portfolio of brands has aided Central Garden & Pet in developing healthy commercial relationships with giant retailers such as Walmart Stores, Inc. (WMT - Free Report) , The Home Depot, Inc. (HD - Free Report) and Lowe's Companies, Inc. (LOW - Free Report) . We believe this provides the company significant opportunity to boost growth.
Solid Earnings History
Driven by its strategic efforts, Central Garden & Pet’s bottom line has outpaced the Zacks Consensus Estimate for 12 straight quarters now. In fact, the company has delivered an impressive average earnings beat of 122.2% in the trailing four quarters. Further, the company boasts a long-term earnings growth rate of 10%.
Impressive Gross Margin Trend
Gross margin – an important financial metrics – that gives an indication about the company’s health has shown constant improvement in the past five quarters. Improvement in gross margin can be attributed to the company’s efforts toward improving manufacturing efficiency and exit from the holiday decor business, which was hampering the margin. Further, margin gains result from lower raw material costs.
In the first, second and third quarters of fiscal 2017 gross margin expanded 110, 90 and 10 basis points to 28.8%, 32.2% and 31.9%, respectively.
Bottom Line
Though stiff competition and seasonality of garden business may strain its margins, we believe that these headwinds will be easily offset by Central Garden & Pet’s robust strategies.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>