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Here's Why Central Garden (CENT) Stock is Losing Momentum
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Central Garden & Pet Company (CENT - Free Report) has been suffering owing to softness in the Pet segment's animal health businesses and higher expenses. Investor sentiment for the stock was further hurt by fourth-quarter fiscal 2019 results. Management hinted that the acquisition of the highly-seasonal Bell Nursery business, along with sluggishness in animal health businesses owing to bad weather, impacted the results.
Management expects to incur loss of 10-15 cents per share during the first quarter of fiscal 2020 owing to unfavorable timing of orders in the Garden segment, continued sluggishness in the animal health businesses and increase in corporate expenses. Moreover, Central Garden & Pet anticipates fiscal 2020 earnings to be in line or slightly above fiscal 2019 reported figure of $1.61. Increased investments in demand creation capabilities to drive long-term sustainable growth and challenges in animal health businesses will be headwinds to earnings growth for the year.
A glimpse at the Zacks Rank #5 (Strong Sell) stock’s price performance reveals that it has underperformed the industry in the past one month. Shares of this Walnut Creek, CA-based company have lost 9%, wider than the industry’s decline of 1.6%. Notably, in the past three months, the stock has increased 2.3%.
Moreover, unimpressive estimate revision trend for the first quarter and fiscal 2020 drives pessimism. Over the past 30 days, the Zacks Consensus Estimate has moved down from earnings of 4 cents to loss of 12 cents for the first quarter and by 15.3% to $1.61 for fiscal 2020.
Notably, the company is grappling with rising costs for a while now. We note that SG&A costs have increased 6.9% in fourth-quarter fiscal 2019. The rise in SG&A was due to increase in both selling and delivery expense, and warehouse and administrative expense. Selling and delivery expense increased mainly due to recent buyouts and secondarily owing to increased delivery spend partially offset by reduced marketing and media spend. Warehouse and administrative expense increased on account of recent acquisitions as well as increased bad debt expense within the Pet segment.
That said, the current dismal performance is a concern for the company.
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Shoe Carnival, Inc. (SCVL - Free Report) delivered average positive earnings surprise of 11.5% in the trailing four quarters. It currently sports a Zacks Rank #1.
Tilly's, Inc. (TLYS - Free Report) has a long-term earnings growth rate of 11% and a Zacks Rank #1.
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Here's Why Central Garden (CENT) Stock is Losing Momentum
Central Garden & Pet Company (CENT - Free Report) has been suffering owing to softness in the Pet segment's animal health businesses and higher expenses. Investor sentiment for the stock was further hurt by fourth-quarter fiscal 2019 results. Management hinted that the acquisition of the highly-seasonal Bell Nursery business, along with sluggishness in animal health businesses owing to bad weather, impacted the results.
Management expects to incur loss of 10-15 cents per share during the first quarter of fiscal 2020 owing to unfavorable timing of orders in the Garden segment, continued sluggishness in the animal health businesses and increase in corporate expenses. Moreover, Central Garden & Pet anticipates fiscal 2020 earnings to be in line or slightly above fiscal 2019 reported figure of $1.61. Increased investments in demand creation capabilities to drive long-term sustainable growth and challenges in animal health businesses will be headwinds to earnings growth for the year.
A glimpse at the Zacks Rank #5 (Strong Sell) stock’s price performance reveals that it has underperformed the industry in the past one month. Shares of this Walnut Creek, CA-based company have lost 9%, wider than the industry’s decline of 1.6%. Notably, in the past three months, the stock has increased 2.3%.
Moreover, unimpressive estimate revision trend for the first quarter and fiscal 2020 drives pessimism. Over the past 30 days, the Zacks Consensus Estimate has moved down from earnings of 4 cents to loss of 12 cents for the first quarter and by 15.3% to $1.61 for fiscal 2020.
Notably, the company is grappling with rising costs for a while now. We note that SG&A costs have increased 6.9% in fourth-quarter fiscal 2019. The rise in SG&A was due to increase in both selling and delivery expense, and warehouse and administrative expense. Selling and delivery expense increased mainly due to recent buyouts and secondarily owing to increased delivery spend partially offset by reduced marketing and media spend. Warehouse and administrative expense increased on account of recent acquisitions as well as increased bad debt expense within the Pet segment.
That said, the current dismal performance is a concern for the company.
3 Stocks to Consider
Boot Barn Holdings, Inc. (BOOT - Free Report) delivered average positive earnings surprise of 22.7% in the trailing four quarters. It has a long-term earnings growth rate of 17% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shoe Carnival, Inc. (SCVL - Free Report) delivered average positive earnings surprise of 11.5% in the trailing four quarters. It currently sports a Zacks Rank #1.
Tilly's, Inc. (TLYS - Free Report) has a long-term earnings growth rate of 11% and a Zacks Rank #1.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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