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Central Garden & Pet (CENT) Q4 Earnings Lag, Guides FY18
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Central Garden & Pet Company (CENT - Free Report) reported mixed fourth-quarter fiscal 2017 results, wherein earnings missed the Zacks Consensus Estimate but revenues lagged the same. Notably, the company’s bottom-line missed the consensus mark after beating the same in the trailing 12 quarters. Adjusted earnings of 8 cents per share lagged the Zacks Consensus Estimate by a couple of cents and also declined 38.5% year over year.
However, the top line continues to impress investors, beating the consensus estimate for fourth quarter in a row. Net sales of this leading producer of branded lawn & garden and pet supplies products grew 18.6% year over year to $490.5 million and also came ahead of the Zacks Consensus Estimate of $440 million. The increase in sales was driven by buyouts, robust performance of dog & cat as well as controls & fertilizer categories. It was further aided by an additional week compared to the prior year. The company’s organic sales, after excluding an additional week, increased 3.6%.
Organic growth, value accretive acquisitions such as that of the pet bedding business and Segrest along with divestment of non-strategic assets have been aiding the company to enhance portfolio. During the reported quarter, both the Pet and Garden segments delivered robust results.
Gross profit increased 20.9% to $145.3 million, while gross margin expanded 50 basis points (bps) to 29.6%. Central Garden & Pet reported adjusted operating income of $14.4 million, compared with $14.8 million in the year-ago quarter. Operating margin shriveled 70 bps to 2.9% in the quarter under review.
Following mixed quarterly numbers, not much movement was witnessed on the stock. However, shares have gained 10.9% in the past three months, against the industry’s decline of 4.9%.
Segment Details
The Pet segment’s net sales gained 22.1% year over year to $330.5 million on the back of the acquisitions and an additional week. Moreover, Pet organic sales increased 3.4% primarily owing to robust performance of the dog & cat businesses. Sales across the segment’s branded product and other manufacturers’ products came in at $267.4 million and $63.1 million, reflecting an increase of 24.7% and 12.3%, respectively.
The segment’s operating income increased 21.8% year over year to $27.5 million, while operating margin came in at 8.3%, flat year over year. The segment’s operating income was negatively impacted by charges related to buyouts and rise in warehouse costs.
Net sales at the Garden segment advanced 12% to $160 million. Sales across the segment’s branded product came in at $126.1 million, up 9.4%; while other manufacturers’ reported revenues of $33.9 million, up 23.3% year over year. Meanwhile, organic sales including an additional week increased 4.1% buoyed by solid performance of controls & fertilizer category and other manufacturers' products.
The segment recorded an operating income of $0.2 million, in comparison with $2.7 million registered in the prior-year quarter.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $32.4 million, long-term debt of $395.3 million and shareholders’ equity of $635.7 million, excluding non-controlling interest of $1.5 million.
Central Garden & Pet Company Price, Consensus and EPS Surprise
The company anticipates 2018 earnings on a GAAP basis to be $1.62 per share or higher, reflecting an increase of 6.6% year over year. Moreover, management expects adjusted earnings per share to increase by 8% or higher. Capital expenditure for fiscal 2018 is project to be nearly $40 million. The Zacks Consensus Estimate for 2018 is currently pegged at $1.66.
American Eagle Outfitters delivered an average positive earnings surprise of 3.9% in the trailing four quarters and has a long-term earnings growth rate of 8.7%.
Boot Barn Holdings has an impressive long-term earnings growth rate of 15.7%.
Children's Place delivered an average beat of 14% in the last four quarters.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
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Central Garden & Pet (CENT) Q4 Earnings Lag, Guides FY18
Central Garden & Pet Company (CENT - Free Report) reported mixed fourth-quarter fiscal 2017 results, wherein earnings missed the Zacks Consensus Estimate but revenues lagged the same. Notably, the company’s bottom-line missed the consensus mark after beating the same in the trailing 12 quarters. Adjusted earnings of 8 cents per share lagged the Zacks Consensus Estimate by a couple of cents and also declined 38.5% year over year.
However, the top line continues to impress investors, beating the consensus estimate for fourth quarter in a row. Net sales of this leading producer of branded lawn & garden and pet supplies products grew 18.6% year over year to $490.5 million and also came ahead of the Zacks Consensus Estimate of $440 million. The increase in sales was driven by buyouts, robust performance of dog & cat as well as controls & fertilizer categories. It was further aided by an additional week compared to the prior year. The company’s organic sales, after excluding an additional week, increased 3.6%.
Organic growth, value accretive acquisitions such as that of the pet bedding business and Segrest along with divestment of non-strategic assets have been aiding the company to enhance portfolio. During the reported quarter, both the Pet and Garden segments delivered robust results.
Gross profit increased 20.9% to $145.3 million, while gross margin expanded 50 basis points (bps) to 29.6%. Central Garden & Pet reported adjusted operating income of $14.4 million, compared with $14.8 million in the year-ago quarter. Operating margin shriveled 70 bps to 2.9% in the quarter under review.
Following mixed quarterly numbers, not much movement was witnessed on the stock. However, shares have gained 10.9% in the past three months, against the industry’s decline of 4.9%.
Segment Details
The Pet segment’s net sales gained 22.1% year over year to $330.5 million on the back of the acquisitions and an additional week. Moreover, Pet organic sales increased 3.4% primarily owing to robust performance of the dog & cat businesses. Sales across the segment’s branded product and other manufacturers’ products came in at $267.4 million and $63.1 million, reflecting an increase of 24.7% and 12.3%, respectively.
The segment’s operating income increased 21.8% year over year to $27.5 million, while operating margin came in at 8.3%, flat year over year. The segment’s operating income was negatively impacted by charges related to buyouts and rise in warehouse costs.
Net sales at the Garden segment advanced 12% to $160 million. Sales across the segment’s branded product came in at $126.1 million, up 9.4%; while other manufacturers’ reported revenues of $33.9 million, up 23.3% year over year. Meanwhile, organic sales including an additional week increased 4.1% buoyed by solid performance of controls & fertilizer category and other manufacturers' products.
The segment recorded an operating income of $0.2 million, in comparison with $2.7 million registered in the prior-year quarter.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $32.4 million, long-term debt of $395.3 million and shareholders’ equity of $635.7 million, excluding non-controlling interest of $1.5 million.
Central Garden & Pet Company Price, Consensus and EPS Surprise
Central Garden & Pet Company Price, Consensus and EPS Surprise | Central Garden & Pet Company Quote
2018 Guidance
The company anticipates 2018 earnings on a GAAP basis to be $1.62 per share or higher, reflecting an increase of 6.6% year over year. Moreover, management expects adjusted earnings per share to increase by 8% or higher. Capital expenditure for fiscal 2018 is project to be nearly $40 million. The Zacks Consensus Estimate for 2018 is currently pegged at $1.66.
Zacks Rank
Central Garden currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering from the retail space are American Eagle Outfitters, Inc. (AEO - Free Report) , Boot Barn Holdings, Inc. (BOOT - Free Report) and The Children's Place, Inc. (PLCE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Eagle Outfitters delivered an average positive earnings surprise of 3.9% in the trailing four quarters and has a long-term earnings growth rate of 8.7%.
Boot Barn Holdings has an impressive long-term earnings growth rate of 15.7%.
Children's Place delivered an average beat of 14% in the last four quarters.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>