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Central Garden & Pet (CENT)
NASDAQ:CENT

Central Garden Pet (CENT) AI Stock Analysis

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Central Garden Pet

(NASDAQ:CENT)

70Outperform
Central Garden Pet has a solid financial foundation with strong cash flow management and a stable balance sheet. While the earnings call highlighted positive developments and improved profit margins, challenges such as potential tariffs and consumer pressure remain. The technical analysis indicates a bearish trend, which may be a concern for short-term investors. Overall, the stock is fairly valued, with growth potential driven by strategic initiatives in e-commerce and cost management.
Positive Factors
Corporate Leadership
CEO appointment the best possible outcome; BUY, $48 PT.
Financial Performance
Central Garden & Pet reported robust Q1 results, with sales 4% above consensus and profitability well ahead across all metrics.
Guidance
The company maintained its full year guidance, indicating optimism about its performance for the rest of the year.
Negative Factors
Earnings Miss
Central Garden & Pet reported Q4 results that missed across the board with sales, adjusted EBITDA, and EPS all coming in substantially below expectations.
Market Conditions
Weather will remain a key driver of margin with nearly 70% of annual Garden sales done in Q2/Q3, which could impact volumes and fixed-cost absorption.
Product Line Challenges
Declines in pet durables are expected to continue, with the company rationalizing unprofitable SKUs.

Central Garden Pet (CENT) vs. S&P 500 (SPY)

Central Garden Pet Business Overview & Revenue Model

Company DescriptionCentral Garden & Pet Company produces and distributes various products for the lawn and garden, and pet supplies markets in the United States. It operates through two segments, Pet and Garden. The Pet segment provides dog and cat supplies, such as dog treats and chews, toys, pet beds and grooming products, waste management and training pads, and pet containment; supplies for aquatics, small animals, reptiles, and pet birds, including toys, cages and habitats, bedding, and food and supplements; animal and household health and insect control products; live fish and products for fish, reptiles, and other aquarium-based pets, such as aquariums, furniture and lighting fixtures, pumps, filters, water conditioners, food, and supplements; and products for horses and livestock, as well as outdoor cushions and pillows. This segment sells its products under the Aqueon, Cadet, Comfort Zone, Farnam, Four Paws, Kaytee, K&H Pet Products, Nylabone, and Zilla brands. The Garden segment offers lawn and garden supplies products that include grass seed; wild bird feed, bird feeders, bird houses, and other birding accessories; fertilizers; decorative outdoor lifestyle products; live plants; and weed and grass, as well as other herbicides, insecticide, and pesticide products. This segment sells its lawn and garden supplies products under the AMDRO, Ferry-Morse, Pennington, and Sevin brands, as well as under Bell Nursery, Lilly Miller, and Over-N-Out other brand names. Central Garden & Pet Company was founded in 1955 and is based in Walnut Creek, California.
How the Company Makes MoneyCentral Garden & Pet generates revenue through the sale of its diverse range of branded and private label products across its Pet and Garden segments. The company sells its products to a variety of retail customers, including mass merchandisers, pet superstores, home improvement centers, independent garden centers, and specialized pet stores. Key revenue streams include the sale of pet foods, supplies, and health products, as well as lawn and garden consumables. Additionally, Central Garden & Pet benefits from strategic acquisitions and partnerships that expand its product offerings and market reach, thus contributing to its earnings growth.

Central Garden Pet Financial Statement Overview

Summary
Central Garden Pet demonstrates solid financial management with stable revenue and profitability metrics. While the income statement reflects effective cost management, there is a slight decline in profitability that may require strategic adjustments. The balance sheet is strong, with manageable leverage and stable equity positioning. Cash flow generation is a key strength, offering financial flexibility. The company shows resilience but must address growth challenges to enhance its financial standing further.
Income Statement
75
Positive
The company exhibits stable revenue generation with a slight decline in the TTM compared to the previous year. The Gross Profit Margin is healthy at approximately 29.5%, indicating efficient cost management. However, there is a noticeable decline in Net Profit Margin from 3.8% to 3.77% in the TTM, suggesting increased expenses or reduced operational efficiency. Revenue growth shows a slight downward trend compared to the previous year, which may indicate a challenge in sustaining growth momentum.
Balance Sheet
70
Positive
The company's Debt-to-Equity ratio stands at a moderate level, suggesting manageable leverage, although it increased slightly over the year. Return on Equity (ROE) is relatively low at 8.0%, pointing to modest returns on shareholders' equity. The Equity Ratio is stable at around 43.8%, reflecting a balanced capital structure. The balance sheet is stable but shows room for improvement in profitability and leverage management.
Cash Flow
80
Positive
Operating Cash Flow remains robust and has shown consistency over the periods. The Free Cash Flow has improved significantly, highlighting effective capital expenditure control. The Operating Cash Flow to Net Income ratio is favorable, indicating strong cash-generating ability relative to net income. The Free Cash Flow to Net Income ratio also demonstrates strong liquidity management, providing a cushion for future investments or debt repayment.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
3.22B3.20B3.31B3.34B3.30B2.70B
Gross Profit
952.49M943.74M946.84M992.30M970.90M796.56M
EBIT
204.97M185.39M210.65M260.04M254.50M142.40M
EBITDA
311.72M290.76M307.17M340.98M329.22M253.34M
Net Income Common Stockholders
121.56M107.98M125.64M152.15M151.75M120.68M
Balance SheetCash, Cash Equivalents and Short-Term Investments
27.04M753.55M488.73M177.44M426.42M652.71M
Total Assets
1.20B3.50B3.38B3.28B3.12B2.34B
Total Debt
415.13M1.42B1.37B1.38B1.36B814.06M
Net Debt
388.09M666.90M885.69M1.20B930.20M161.35M
Total Liabilities
655.67M1.94B1.93B1.95B1.89B1.26B
Stockholders Equity
540.03M1.56B1.45B1.33B1.22B1.08B
Cash FlowFree Cash Flow
356.74M351.76M327.67M-149.24M170.51M221.22M
Operating Cash Flow
395.84M394.89M381.63M-34.03M250.84M264.27M
Investing Cash Flow
-44.13M-105.19M-34.58M-142.98M-899.36M-48.11M
Financing Cash Flow
-73.10M-25.44M-37.55M-66.81M420.48M-60.56M

Central Garden Pet Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price35.94
Price Trends
50DMA
36.63
Negative
100DMA
37.57
Negative
200DMA
37.57
Negative
Market Momentum
MACD
-0.37
Negative
RSI
49.28
Neutral
STOCH
53.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CENT, the sentiment is Neutral. The current price of 35.94 is above the 20-day moving average (MA) of 35.90, below the 50-day MA of 36.63, and below the 200-day MA of 37.57, indicating a neutral trend. The MACD of -0.37 indicates Negative momentum. The RSI at 49.28 is Neutral, neither overbought nor oversold. The STOCH value of 53.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CENT.

Central Garden Pet Risk Analysis

Central Garden Pet disclosed 33 risk factors in its most recent earnings report. Central Garden Pet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Central Garden Pet Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ZTZTS
79
Outperform
$73.04B29.8450.91%1.10%8.33%7.70%
73
Outperform
$13.31B35.77101.78%6.40%891.13%
70
Outperform
$2.15B19.818.18%-2.85%-27.70%
63
Neutral
$20.68B14.36-12.41%3.14%1.24%2.53%
61
Neutral
$4.11B90.474.67%27.16%
59
Neutral
$1.54B-3.07%15.97%78.77%
45
Neutral
$815.97M-8.86%1.30%91.08%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CENT
Central Garden Pet
35.94
-6.22
-14.75%
FRPT
Freshpet
84.39
-31.46
-27.16%
ZTS
Zoetis
163.11
-2.15
-1.30%
TRUP
Trupanion
36.25
8.86
32.35%
CHWY
Chewy
32.17
16.08
99.94%
WOOF
Petco Health and Wellness Company
2.96
0.88
42.31%

Central Garden Pet Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -3.05% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive start to the fiscal year with strong financial performance, particularly in e-commerce and profit margins, driven by effective cost management and strategic initiatives. However, challenges such as potential tariffs, a softer consumer environment, and certain segment declines pose risks. The company remains confident in its strategy and guidance for the year.
Highlights
Strong Financial Performance
Net sales increased by 3% to $656 million. Operating income increased to $28 million from $8 million in the prior year quarter, with operating margin improving by 300 basis points to 4.3%.
Record E-commerce Growth
E-commerce now accounts for 28% of pet sales, with net sales growing 6% over the prior year. Garden e-commerce sales grew double digits.
Improved Profit Margins
Gross profit grew to $196 million from $179 million, with a gross margin improvement of 160 basis points to 29.8%. SG&A expenses decreased by 2%.
Successful Cost and Simplicity Program
The program led to productivity gains, safety improvements, and distribution optimization, particularly with the new facility in Covington, Georgia.
Positive Outlook and Guidance
Reaffirmed fiscal 2025 guidance for non-GAAP EPS of $2.20 or higher, despite challenges.
Lowlights
Potential Tariff Impact
There are concerns about potential tariffs on China, Canada, and Mexico impacting costs, without the ability to easily pass these costs to customers.
Softening Consumer Pressure
Expected ongoing consumer pressure and competitive marketplace challenges, particularly in brick-and-mortar retail.
Pet Segment Challenges
Durable sales saw a single-digit decline, continuing a trend from the past five quarters.
Anticipated Softer Second Quarter
Expecting a softer Q2 compared to last year, with sales potentially down low-single digits.
Company Guidance
During the Garden & Pets Fiscal 2025 First Quarter Earnings Call, the company outlined several key metrics and strategic initiatives. The company reported a 3% increase in net sales to $656 million, driven by favorable weather and promotional activities. Earnings per share rose to $0.21 from $0.01 a year ago, with net income at $14 million compared to $430,000 in the prior year. The gross margin improved by 160 basis points to 29.8%, and SG&A expenses decreased by 2%. The Pet segment saw a 4% increase in net sales to $427 million, with e-commerce accounting for 28% of pet sales. The Garden segment net sales grew by 2% to $229 million. The company reaffirmed its fiscal 2025 guidance for non-GAAP EPS of $2.20 or higher, while emphasizing ongoing investments in e-commerce and digital capabilities. The call also highlighted the successful implementation of the Cost and Simplicity program, which contributed to the improved margins.

Central Garden Pet Corporate Events

Shareholder Meetings
Central Garden Pet Completes 2025 Shareholders Meeting
Neutral
Feb 18, 2025

On February 12, 2025, Central Garden Pet held its 2025 Annual Meeting of Shareholders where shareholders voted on key proposals. The election of ten directors to serve until the 2026 Annual Meeting was completed, with all nominees successfully elected. Additionally, shareholders ratified Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending on September 27, 2025. The Board withdrew a proposal concerning an amendment to the company’s Certificate of Incorporation prior to the meeting. Shareholder voting rights were exercised according to share class entitlements, and the proposals reflect ongoing governance and fiscal oversight commitments.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.