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Bear of the Day

Central Garden & Pet's (CENT) dismal fourth-quarter 2012 results compelled us to adopt a bearish stance on the stock. The company posted a quarterly loss of $0.21 per share that remained flat with the prior-year quarter loss but was wider than the Zacks Consensus Estimate of a loss of $0.20. The company hinted that increased promotional and innovation expenses and lower revenues from the decor business negatively impacted the results.

Central Garden has missed the Zacks Consensus Estimate by an average of 8.5% in the trailing four quarters. For fiscal 2013 and 2014, the Zacks Consensus Estimates dropped by 6 cents and 12 cents to $0.80 and $1.01 per share in the last 7 days, respectively.

Management now anticipates that sales and earnings for the first quarter of fiscal 2013 will be lower than the comparable prior-year period due to the adverse impact of Hurricane Sandy that to a great extent adversely impacted the Pet segment. Consequently, we downgrade our recommendation to Underperform.

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