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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)

Rating:72Outperform
Price Target:
$39.00
▲(9.95%Upside)
Central Garden Pet's overall stock score reflects its strong financial performance and positive earnings call outlook, despite mixed technical signals and valuation considerations. The company's robust cash flow and operational efficiency highlight its resilience, though challenges in sales and macroeconomic uncertainties require attention. The absence of significant corporate events ensures focus on core performance factors.
Positive Factors
Full Year Guidance
The company maintained its full year guidance, indicating optimism about its performance for the rest of the year.
M&A Opportunities
Management remains open to attractive M&A opportunities and is looking for high-growth consumables companies that can enhance margins and build scale.
Share Repurchase
The company repurchased $98 million in shares through the first half of the year and another $39 million in April, signaling management's belief that the stock is undervalued.
Negative Factors
Decline in Pet Durables
Declines in pet durables are expected to continue, with the company rationalizing unprofitable SKUs.
Inflationary Pressures
Central Garden & Pet expects elevated inflationary pressures in the second half, particularly in its Pet segment.
Weather Impact
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.

Central Garden Pet (CENT) vs. SPDR S&P 500 ETF (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 Company generates revenue primarily through the sale of its extensive portfolio of branded products in the lawn and garden and pet supplies sectors. The company distributes its products through a variety of channels including mass retailers, home improvement stores, garden centers, and pet superstores. Significant revenue streams include lawn and garden products such as fertilizers and insecticides, and pet supplies such as pet food and accessories. Central Garden & Pet also benefits from strategic acquisitions that expand its product offerings and enhance its market presence. The company's partnerships with major retail chains and its focus on innovation and brand development are key factors contributing to its earnings.

Central Garden Pet Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q2-2025)
|
% Change Since: 2.96%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong operational efficiency and record achievements in certain segments despite challenges in sales due to weather and macroeconomic factors. The company showed confidence in its strategic initiatives and financial position, but faced uncertainties from tariffs and geopolitical tensions.
Q2-2025 Updates
Positive Updates
Record Non-GAAP Operating Income in Pet Segment
The Pet segment achieved record non-GAAP operating income with a 5% increase, driven by productivity gains from the Cost and Simplicity program.
Wild Bird Business Achieves Record Sales
The Wild Bird business benefited from extended cold weather, leading to record sales and strong consumer demand.
E-commerce Expansion
The upgraded distribution center in Eastern Pennsylvania added direct-to-consumer capabilities, shipping over 10,000 packages and fueling e-commerce momentum.
Cost and Simplicity Program Success
Initiatives under the Cost and Simplicity program led to significant margin improvements and operational efficiency, including a new 300,000 square foot distribution center in New Jersey.
Strong Financial Position
The company ended the quarter with $517 million in cash and cash equivalents and no borrowings under its $750 million credit facility.
Negative Updates
Net Sales Decline
Net sales decreased by 7% to $834 million, impacted by earlier timing of preseason orders and delayed garden selling season due to weather.
Garden Segment Challenges
Garden net sales decreased by 10%, primarily due to a delayed start to the spring season and loss of two product lines in the third-party distribution business.
Tariff and Geopolitical Uncertainties
Recent tariff actions and geopolitical tensions increased macroeconomic uncertainty, impacting consumer confidence and anticipated inflationary pressures in the second half.
Company Guidance
During Central Garden & Pet's Fiscal 2025 Second Quarter Earnings Call, the company provided guidance highlighting a solid second quarter performance despite challenges such as unseasonably cold and wet weather, which delayed the garden selling season and impacted sales. The company's strategic focus on execution led to growth in both GAAP and non-GAAP earnings per share, meaningful margin improvement, and record non-GAAP operating income within the Pet segment. The Wild Bird business achieved record sales, benefiting from extended cold weather. The company's e-commerce sales also remained strong, with its brands holding the number one online sales position in both the Wild Bird and Grass Seed categories. Central Garden & Pet reaffirmed its fiscal 2025 guidance for non-GAAP EPS of $2.20 or higher, indicating confidence in its outlook for the year, despite anticipating heightened inflationary pressures and a more challenging retail environment in the second half of the fiscal year due to recent tariff actions and geopolitical tensions.

Central Garden Pet Financial Statement Overview

Summary
Central Garden Pet exhibits 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
618.02M753.55M488.73M177.44M426.42M652.71M
Total Assets
3.54B3.55B3.38B3.28B3.12B2.34B
Total Debt
1.41B1.42B1.37B1.38B1.36B814.06M
Net Debt
794.32M666.90M885.69M1.20B930.20M161.35M
Total Liabilities
2.02B2.00B1.93B1.95B1.89B1.26B
Stockholders Equity
1.52B1.56B1.45B1.33B1.22B1.08B
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
Negative
Last Price35.47
Price Trends
50DMA
35.45
Positive
100DMA
36.06
Negative
200DMA
36.81
Negative
Market Momentum
MACD
0.13
Positive
RSI
48.36
Neutral
STOCH
34.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CENT, the sentiment is Negative. The current price of 35.47 is below the 20-day moving average (MA) of 35.79, above the 50-day MA of 35.45, and below the 200-day MA of 36.81, indicating a neutral trend. The MACD of 0.13 indicates Positive momentum. The RSI at 48.36 is Neutral, neither overbought nor oversold. The STOCH value of 34.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$2.04B19.168.07%-4.60%-26.61%
71
Outperform
$646.90M16.786.35%4.01%22.46%
HLHLF
68
Neutral
$803.57M2.79-31.74%-2.45%100.59%
66
Neutral
$725.05M13.0416.58%1.38%7.40%-14.93%
65
Neutral
$8.94B14.994.76%203.76%3.54%-2.49%
59
Neutral
$726.41M-5.95%2.44%91.41%
58
Neutral
$2.24B29.588.20%2.67%0.49%-12.32%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CENT
Central Garden Pet
35.47
-7.00
-16.48%
HLF
Herbalife
7.67
-3.76
-32.90%
JJSF
J & J Snack Foods
114.35
-45.49
-28.46%
JBSS
John B Sanfilippo & Son
61.68
-35.52
-36.54%
SENEA
Seneca Foods
92.08
32.32
54.08%
STKL
SunOpta
5.76
-0.02
-0.35%

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.