Investors want to load their portfolio with stocks boasting promising returns and a track record of better-than-expected results, and Central Garden & Pet Company (CENT - Analyst Report) is one such pick satisfying these criteria. Notably, the stock yielded a substantial return of over 93% year to date, and has a long-term earnings growth rate of 10% with a VGM Score of “A”. Moreover, its share price is currently hovering close to its 52-week high of $27.89.
Central Garden & Pet is revamping both its Pet and Garden segments to have a balanced approach that encompasses revenue growth as well as cost reduction. Also, the company intends to launch several products that would appeal to consumers, along with improving its customer service. Further, it is likely to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels.
Being the leading producer of garden and pet supplies products in the U.S. with a diversified portfolio of brands has helped Central Garden & Pet develop healthy commercial relationships with retail giants like Wal-Mart Stores Inc. (WMT - Analyst Report) , The Home Depot, Inc. (HD - Analyst Report) and Lowe's Companies, Inc. (LOW - Analyst Report) . We believe this provides the company with significant opportunity to drive growth.
We also note that organic growth, value accretive acquisitions such as that of the pet bedding business, and divestment of non-strategic assets have been aiding Central Garden & Pet’s performance. These initiatives have helped the company to post better-than-expected earnings for the eighth straight quarter, when it reported third-quarter fiscal 2016 results. Also, its top line surpassed the Zacks Consensus Estimate, thus marking the fifth successive quarter of revenue beat.
However, stiff competition and seasonality of the garden business, which is limited to the period between spring to summer, remain concerns for the company. Moreover, the decline in consumers’ discretionary spending may also hurt results.
Given the pros and cons embedded in the stock, Central Garden & Pet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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