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Factors Affecting Central Garden & Pet (CENT) in Q4 Earnings

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Central Garden & Pet Company (CENT - Free Report) is slated to report fourth-quarter fiscal 2018 results on Nov 27. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by average of 2.6%. In the last reported quarter, this producer and marketer of lawn & garden products and pet supplies delivered a negative earnings surprise of 1.3%.

How Are Estimates Faring?

Central Garden & Pet Company is likely to record year-over-year bottom-line growth of 12.5% in the fourth quarter. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 9 cents compared with 8 cents per share reported in the year-ago quarter. We note that the Zacks Consensus Estimate has remained stable in the past 30 days.

The Zacks Consensus Estimate for revenues is $487.4 million, down 0.6% from $490.5 million in the year-ago quarter. We note that total revenues of this Walnut Creek, CA-based company increased 14.5% in the last reported quarter.

Central Garden & Pet Company Price and EPS Surprise

Factors to Consider

Central Garden & Pet is revamping both Pet and Garden segments. The company intends to have a balanced approach that encompasses revenue growth as well as cost reduction. Also, it plans to launch several products and upgrade customer service. These ongoing transformation efforts are expected to yield results in the near future.

Further, the company is making efforts to gain market share in home centers, mass market, grocery, specialty pet store and other independent channels. In the third quarter of fiscal 2018, both Pet and Garden segments reported year-over-year revenue growth of 13.2% and 16.1%, respectively. Moreover, the Zacks Consensus Estimate for revenues of the Garden and Pet segments are pegged at $154 million and $334 million for the to-be-reported quarter, up 22.2% and 0.9% year over year, respectively.

However, rise in cost of goods sold and occupancy, higher SG&A and interest expenses, and seasonality of Garden business are concerns. We note that organic sales in the Garden segment declined 8% on account of lower demand due to adverse weather condition during early third quarter and a considerable year-over-year shift in selling weeks.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Central Garden & Pet is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Central Garden & Pet has a Zacks Rank #3, but its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks with Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #2.

DICK’S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #2.

Signet Jewelers Ltd. (SIG - Free Report) has an Earnings ESP of +8.97% and a Zacks Rank #3.

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