Central Garden and Pet (CENT - Analyst Report) has
beaten the Zacks Consensus Estimate for earnings and
revenue in each of the last five quarters. The most recent report was a yet another example of a solid beat. Let's take
a look at the quarter, the earnings history, estimate revisions
and of course the valuation. I think you will like what you
see from this Zacks Rank #1 (Strong Buy) stock seeing as it is
the Bull of the Day.
CENT beat the Zacks Consensus Estimate of
$0.43 when it reported $0.48 in the first week of August. This $0.05 beat was
good for a 11.6% positive earnings surprise.
The topline was also impressive with the company
delivering $515M in sales when the Zacks Consensus Estimate was
looking for $491M. That $24M beat was good for an 4.8% positive
Central Garden & Pet makes products for the lawn & garden and pet supplies markets. In Lawn & Garden: Grass seed including the brands Pennington and The Rebels; wild bird feed and the brands Pennington and Kaytee; weed and insect control and the brands AMDRO, Sevin, Ironite and Over 'N Out and decorative outdoor patio products and the brands Norcal, New England Pottery and Matthews Four Seasons. The Company also provide a host of other regional and application-specific garden brands and supplies. It also provide a host of other application-specific Pet brands and supplies.
The last time CENT missed the Zacks Consensus Estimate
was in 2014. Since then, there has been a string of 8
consecutive positive earnings surprises. This is a very
enviable track record and demonstrates management's ability to
guide Wall Street to a beatable number and then still
The topline also has a very strong history, but not quite as impressive as we have seen on the bottom line. The company
missed on top back in the March 2015 quarter, when it posted sales that were $2M below expectations.
When you have a Zacks Rank #1 (Strong Buy) you are
going to see positive earnings estimate revisions. Following
the most recent beat, the Zacks Consensus Estimate for 2016 has
moved from $1.13 to $1.20.
The 2017 Zacks Consensus Estimate was $1.26 prior to the earnings release and has since moved higher to $1.31
One thing that I have been looking for in stocks lately is room for multiple expansion. CENT has that, as it trades at 21x forward earnings and that is a discount to the industry average of 23x. The price to book multiple of 2.3x should get some value investors interested in this name and not just because this stock trades at a discount to that industry average as well. I saved the biggest discount for the end and that metric would be price to sales. CENT trades at 0.7x sales while the industry average is sitting at a lofty 3.1x.
Zacks has developed a chart that helps investors see
how earnings estimates have impacted the price of the stock
over the last several years. We call this chart the price and
consensus chart, and each color coded lines represents analyst
estimates over a designated year. As estimates increase, the
stock tends to follow. The Zacks Rank is impacted by earnings
estimate increases, beats and incorporates the idea of analyst
agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see
that estimates are moving higher.
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