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Central Garden (CENT) Up 0.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Central Garden (CENT - Free Report) . Shares have added about 0.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Central Garden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Central Garden & Pet Q1 Earnings Beat, Sales Up Y/Y
Central Garden & Pet Company posted better-than-expected first-quarter fiscal 2022 results, thanks to the sustained demand for Garden and Pet brands. While the top line grew year over year, the bottom line declined from the year-ago period.
The California-based company is on track with its ‘Central to Home’ strategy and investing in digital marketing and innovation as well as customer insights and brand building to drive growth. The company is also expanding its manufacturing capacity and investing in automation.
Let’s Delve Deeper
Central Garden & Pet Company reported quarterly earnings of 16 cents a share that handily beat the Zacks Consensus Estimate of 1 cent. However, the figure exhibited a decline from earnings of 29 cents reported in the year-ago period.
The company generated net sales of $661.4 million that surpassed the Zacks Consensus Estimate of $619.7 million. The metric improved 12% from the year-ago period, benefiting from recent acquisitions, which contributed $70 million. Organic sales were almost in line with the prior-year quarter.
Gross profit increased 20% to $198.2 million. Meanwhile, the gross margin expanded 210 basis points to 30%. Pricing and favorable product mix helped offset cost inflation in key commodities, freight and labor.
Operating income totaled $26.2 million, down 3% from the year-ago period. The operating margin shrunk 60 basis points to 4% due to continued inflation and increased investment spending.
SG&A expenses amounted to $172 million, up 24% year over year on acquisitions, higher investment, and a rise in logistics costs. As a percentage of net sales, SG&A expenses increased 260 basis points to 26%.
Segment in Detail
In the Garden segment, net sales advanced 45% to $225 million, courtesy of a $70 million contribution from recent buyouts. However, on an organic basis, net sales declined 0.3%. Strength in wild bird, chemicals & fertilizer, as well as live plants, was more than offset by softness in garden distribution and grass seed. The company grew market share in wild bird and distribution share in live plants and packaged seeds. We note that e-commerce rose in mid-teens on top of triple-digit growth in the prior year. The segment’s operating income surged 30% to $6 million. However, operating margin shriveled 30 basis points to 2.7% primarily due to inflation and investment spending, which more than offset contributions from acquisitions and improved pricing.
Net sales in the Pet segment were $436 million, in line with the year-ago period. Contributions from animal health, dog and cat and the pet distribution businesses were offset by sluggishness in pet beds, small animal and aquatic supplies. The company increased its market share in dog toys, rawhide, equine, reptile and health & wellness. We note that e-commerce now represents 22% of Pet branded sales. The segment’s operating income rose 4% to $45 million, while the operating margin increased 40 basis points to 10.4%. Pricing actions and favorable product mix helped offset inflationary pressure and heightened investment spending.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $296 million, long-term debt of $1,185.1 million and shareholders’ equity of $1,228.2 million, excluding non-controlling interest of $0.7 million. The company repurchased about 153,000 shares of worth $6.7 million during the quarter under review. Management incurred capital expenditures of $24 million during the quarter. The company envisions capital expenditures of $80-$90 million in fiscal 2022.
Outlook
Management reiterated fiscal 2022 GAAP EPS projection of $3.10 or better compared with GAAP EPS of $2.75 in fiscal 2021. The guidance includes anticipated pricing actions as well as investments in capacity expansion, brand building, consumer insights, innovation and e-commerce. The guidance takes into account rising costs for key commodities, freight and labor, return to normalize consumer demand patterns following exceptional demand in the last two fiscal years, and resuming more historical levels of promotional activity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.23% due to these changes.
VGM Scores
Currently, Central Garden has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Central Garden has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Central Garden (CENT) Up 0.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Central Garden (CENT - Free Report) . Shares have added about 0.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Central Garden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Central Garden & Pet Q1 Earnings Beat, Sales Up Y/Y
Central Garden & Pet Company posted better-than-expected first-quarter fiscal 2022 results, thanks to the sustained demand for Garden and Pet brands. While the top line grew year over year, the bottom line declined from the year-ago period.
The California-based company is on track with its ‘Central to Home’ strategy and investing in digital marketing and innovation as well as customer insights and brand building to drive growth. The company is also expanding its manufacturing capacity and investing in automation.
Let’s Delve Deeper
Central Garden & Pet Company reported quarterly earnings of 16 cents a share that handily beat the Zacks Consensus Estimate of 1 cent. However, the figure exhibited a decline from earnings of 29 cents reported in the year-ago period.
The company generated net sales of $661.4 million that surpassed the Zacks Consensus Estimate of $619.7 million. The metric improved 12% from the year-ago period, benefiting from recent acquisitions, which contributed $70 million. Organic sales were almost in line with the prior-year quarter.
Gross profit increased 20% to $198.2 million. Meanwhile, the gross margin expanded 210 basis points to 30%. Pricing and favorable product mix helped offset cost inflation in key commodities, freight and labor.
Operating income totaled $26.2 million, down 3% from the year-ago period. The operating margin shrunk 60 basis points to 4% due to continued inflation and increased investment spending.
SG&A expenses amounted to $172 million, up 24% year over year on acquisitions, higher investment, and a rise in logistics costs. As a percentage of net sales, SG&A expenses increased 260 basis points to 26%.
Segment in Detail
In the Garden segment, net sales advanced 45% to $225 million, courtesy of a $70 million contribution from recent buyouts. However, on an organic basis, net sales declined 0.3%. Strength in wild bird, chemicals & fertilizer, as well as live plants, was more than offset by softness in garden distribution and grass seed. The company grew market share in wild bird and distribution share in live plants and packaged seeds. We note that e-commerce rose in mid-teens on top of triple-digit growth in the prior year. The segment’s operating income surged 30% to $6 million. However, operating margin shriveled 30 basis points to 2.7% primarily due to inflation and investment spending, which more than offset contributions from acquisitions and improved pricing.
Net sales in the Pet segment were $436 million, in line with the year-ago period. Contributions from animal health, dog and cat and the pet distribution businesses were offset by sluggishness in pet beds, small animal and aquatic supplies. The company increased its market share in dog toys, rawhide, equine, reptile and health & wellness. We note that e-commerce now represents 22% of Pet branded sales. The segment’s operating income rose 4% to $45 million, while the operating margin increased 40 basis points to 10.4%. Pricing actions and favorable product mix helped offset inflationary pressure and heightened investment spending.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $296 million, long-term debt of $1,185.1 million and shareholders’ equity of $1,228.2 million, excluding non-controlling interest of $0.7 million. The company repurchased about 153,000 shares of worth $6.7 million during the quarter under review. Management incurred capital expenditures of $24 million during the quarter. The company envisions capital expenditures of $80-$90 million in fiscal 2022.
Outlook
Management reiterated fiscal 2022 GAAP EPS projection of $3.10 or better compared with GAAP EPS of $2.75 in fiscal 2021. The guidance includes anticipated pricing actions as well as investments in capacity expansion, brand building, consumer insights, innovation and e-commerce. The guidance takes into account rising costs for key commodities, freight and labor, return to normalize consumer demand patterns following exceptional demand in the last two fiscal years, and resuming more historical levels of promotional activity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.23% due to these changes.
VGM Scores
Currently, Central Garden has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Central Garden has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.