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.
Central Garden (CENT) Up 4.5% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Central Garden (CENT - Free Report) . Shares have added about 4.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Central Garden & Pet Q1 Earnings Top, Margin Expands
Central Garden & Pet Company came up with first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Markedly, both net sales and earnings improved year over year in spite of the challenging environment.
Management has been taking steps to strengthen its position in the pet supplies and lawn and garden supplies space. Central Garden & Pet Company is focusing on brand building, containing costs, lowering complexity and improving margins. The company has been expanding its manufacturing capacity and simplifying its portfolio.
Let’s Delve Deeper
Central Garden & Pet reported quarterly earnings of 1 cent a share against the Zacks Consensus Estimate of a loss of 18 cents. The bottom line improved sharply from a loss of 16 cents a share reported in the year-ago period. The bottom line benefited from an improved gross margin and early season shipments.
The company generated net sales of $634.5 million, which came ahead of the Zacks Consensus Estimate of $620 million. The metric improved 1.1% from the year-ago period. Organic net sales rose 0.5%.
The gross profit came in at $178.8 million compared with $171.7 million reported in the year-ago period. The gross margin expanded 80 basis points to 28.2%, driven by cost-containment efforts and moderating inflation.
SG&A expenses of $170.4 million decreased from $171.3 million in the prior-year quarter. As a percentage of net sales, it decreased 40 basis points to 26.9%.
The operating income totaled $8.4 million, significantly up from the $0.4 million reported in the year-ago period. The operating margin expanded 120 basis points to 1.3%. Adjusted EBITDA came in at $37 million compared with $28.7 million in the prior-year period.
Segment Details
Net sales for the Pet segment came in at $409.2 million, showing a 1.6% decline compared to the previous year. Strength in Health & Wellness and Aquatics was more than offset by double-digit declines in durables across the pet beds, small animal and distribution business. Organic net sales fell 4.8%, excluding the impact of the recent buyout of TDBBS. E-commerce business continues to grow and now represents approximately 26% of pet sales.
The segment’s operating income came in at $43.4 million, up from $39.6 million reported in the prior-year quarter. Meanwhile, the adjusted operating margin expanded 110 basis points to 10.6%, driven by the favorable impact of Central's Cost and Simplicity program coupled with lower commercial spend.
In the Garden segment, net sales of $225.3 million increased 6.3% from the year-ago period and fared better than our estimate of $214.4 million. Early season shipments in Controls & Fertilizer, Grass, and Packet Seeds contributed to the results. However, unfavorable warmer weather conditions adversely impacted sales in Wild Bird. Organic net sales grew 11.3%.
The segment’s operating loss of $8.9 million improved from an operating loss of $10.8 million reported in the prior-year quarter.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $341.4 million, long-term debt of $1,189.1 million and shareholders’ equity of $1,451.9 million, excluding the non-controlling interest of $0.7 million. The company repurchased about 39,576 shares worth $1.4 million in the quarter under review. Management incurred capital expenditures of $10 million during the quarter. It expects to incur a capital expenditure of $70 million in fiscal 2024.
Outlook
Central Garden & Pet continues to estimate fiscal 2024 adjusted earnings to be $2.50 per share or better compared with the $2.59 reported in fiscal 2023. The projection indicates deflationary pressure in some of the commodity businesses, changing consumer behavior and unfavorable retailer inventory dynamics in an environment of macroeconomic and geopolitical uncertainty. It also suggests modest pricing actions to help mitigate inflationary headwinds.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 6.3% due to these changes.
VGM Scores
Currently, Central Garden has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Central Garden has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Central Garden (CENT) Up 4.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Central Garden (CENT - Free Report) . Shares have added about 4.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Central Garden & Pet Q1 Earnings Top, Margin Expands
Central Garden & Pet Company came up with first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Markedly, both net sales and earnings improved year over year in spite of the challenging environment.
Management has been taking steps to strengthen its position in the pet supplies and lawn and garden supplies space. Central Garden & Pet Company is focusing on brand building, containing costs, lowering complexity and improving margins. The company has been expanding its manufacturing capacity and simplifying its portfolio.
Let’s Delve Deeper
Central Garden & Pet reported quarterly earnings of 1 cent a share against the Zacks Consensus Estimate of a loss of 18 cents. The bottom line improved sharply from a loss of 16 cents a share reported in the year-ago period. The bottom line benefited from an improved gross margin and early season shipments.
The company generated net sales of $634.5 million, which came ahead of the Zacks Consensus Estimate of $620 million. The metric improved 1.1% from the year-ago period. Organic net sales rose 0.5%.
The gross profit came in at $178.8 million compared with $171.7 million reported in the year-ago period. The gross margin expanded 80 basis points to 28.2%, driven by cost-containment efforts and moderating inflation.
SG&A expenses of $170.4 million decreased from $171.3 million in the prior-year quarter. As a percentage of net sales, it decreased 40 basis points to 26.9%.
The operating income totaled $8.4 million, significantly up from the $0.4 million reported in the year-ago period. The operating margin expanded 120 basis points to 1.3%. Adjusted EBITDA came in at $37 million compared with $28.7 million in the prior-year period.
Segment Details
Net sales for the Pet segment came in at $409.2 million, showing a 1.6% decline compared to the previous year. Strength in Health & Wellness and Aquatics was more than offset by double-digit declines in durables across the pet beds, small animal and distribution business. Organic net sales fell 4.8%, excluding the impact of the recent buyout of TDBBS. E-commerce business continues to grow and now represents approximately 26% of pet sales.
The segment’s operating income came in at $43.4 million, up from $39.6 million reported in the prior-year quarter. Meanwhile, the adjusted operating margin expanded 110 basis points to 10.6%, driven by the favorable impact of Central's Cost and Simplicity program coupled with lower commercial spend.
In the Garden segment, net sales of $225.3 million increased 6.3% from the year-ago period and fared better than our estimate of $214.4 million. Early season shipments in Controls & Fertilizer, Grass, and Packet Seeds contributed to the results. However, unfavorable warmer weather conditions adversely impacted sales in Wild Bird. Organic net sales grew 11.3%.
The segment’s operating loss of $8.9 million improved from an operating loss of $10.8 million reported in the prior-year quarter.
Financial Details
Central Garden & Pet ended the quarter with cash and cash equivalents of $341.4 million, long-term debt of $1,189.1 million and shareholders’ equity of $1,451.9 million, excluding the non-controlling interest of $0.7 million. The company repurchased about 39,576 shares worth $1.4 million in the quarter under review. Management incurred capital expenditures of $10 million during the quarter. It expects to incur a capital expenditure of $70 million in fiscal 2024.
Outlook
Central Garden & Pet continues to estimate fiscal 2024 adjusted earnings to be $2.50 per share or better compared with the $2.59 reported in fiscal 2023. The projection indicates deflationary pressure in some of the commodity businesses, changing consumer behavior and unfavorable retailer inventory dynamics in an environment of macroeconomic and geopolitical uncertainty. It also suggests modest pricing actions to help mitigate inflationary headwinds.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 6.3% due to these changes.
VGM Scores
Currently, Central Garden has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Central Garden has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.