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Central Garden & Pet (CENT)
NASDAQ:CENT
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Central Garden Pet
(NASDAQ:CENT)
70Outperform
Positive Factors
Financial Performance
Central Garden & Pet reported robust Q1 results, with sales 4% above consensus and profitability well ahead across all metrics.
Stock Buyback
The company aggressively repurchased $54m worth of stock in Q1, with $131m remaining available under the current authorization.
Strategic Opportunities
Management remains open to attractive M&A opportunities and is looking for high-growth consumables companies that can enhance margins and build scale.
Negative Factors
Earnings Report
Central Garden & Pet reported Q4 results that missed across the board with sales, adjusted EBITDA, and EPS all coming in substantially below expectations.
Product Line Challenges
Declines in pet durables are expected to continue, with the company rationalizing unprofitable SKUs.
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. S&P 500 (SPY)
Market Cap
$2.00B
Dividend YieldN/A
Average Volume (3M)286.07K
Price to Earnings (P/E)18.7
Beta (1Y)0.41
Revenue Growth-2.85%
EPS Growth-27.70%
CountryUS
Employees6,450
SectorConsumer Defensive
Sector Strength92
IndustryPackaged Foods
Share Statistics
EPS (TTM)1.81
Shares Outstanding10,718,231
10 Day Avg. Volume116,076
30 Day Avg. Volume286,071
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.67
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.54
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$37.00Price Target Upside9.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Central Garden Pet Business Overview & Revenue Model
Company DescriptionCentral Garden & Pet (CENT) is a leading innovator, producer, and distributor of products for the lawn and garden and pet supplies markets. The company operates through two primary business segments: Pet and Garden. The Pet segment offers various pet supplies, including products for dogs, cats, birds, small animals, and aquatics. The Garden segment provides a wide range of lawn and garden products, including grass seed, wild bird feed, and fertilizers. Central Garden & Pet is committed to nurturing happy and healthy homes by providing high-quality products and solutions to enhance the lives of pets and their owners, as well as maintaining beautiful gardens.
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
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.75
Positive
Balance Sheet
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.70
Positive
Cash Flow
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.80
Positive
| Breakdown | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.20B | 3.31B | 3.34B | 3.30B | 2.70B | Gross Profit |
| 943.74M | 946.84M | 992.30M | 970.90M | 796.56M | EBIT |
| 185.39M | 210.65M | 260.04M | 254.50M | 142.40M | EBITDA |
| 290.76M | 307.17M | 340.98M | 329.22M | 253.34M | Net Income Common Stockholders |
| 107.98M | 125.64M | 152.15M | 151.75M | 120.68M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 753.55M | 488.73M | 177.44M | 426.42M | 652.71M | Total Assets |
| 3.50B | 3.38B | 3.28B | 3.12B | 2.34B | Total Debt |
| 1.42B | 1.37B | 1.38B | 1.36B | 814.06M | Net Debt |
| 666.90M | 885.69M | 1.20B | 930.20M | 161.35M | Total Liabilities |
| 1.94B | 1.93B | 1.95B | 1.89B | 1.26B | Stockholders Equity |
| 1.56B | 1.45B | 1.33B | 1.22B | 1.08B |
| Cash Flow | Free Cash Flow | |||
| 351.76M | 327.67M | -149.24M | 170.51M | 221.22M | Operating Cash Flow |
| 394.89M | 381.63M | -34.03M | 250.84M | 264.27M | Investing Cash Flow |
| -105.19M | -34.58M | -142.98M | -899.36M | -48.11M | Financing Cash Flow |
| -25.44M | -37.55M | -66.81M | 420.48M | -60.56M |
Central Garden Pet Technical Analysis
Negative
33.91
Price Trends
35.69
Negative
37.03
Negative
37.23
Negative
Market Momentum
-0.46
Positive
38.68
Neutral
25.40
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 33.91 is below the 20-day moving average (MA) of 35.20, below the 50-day MA of 35.69, and below the 200-day MA of 37.23, indicating a bearish trend. The MACD of -0.46 indicates Positive momentum. The RSI at 38.68 is Neutral, neither overbought nor oversold. The STOCH value of 25.40 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $615.86M | 16.27 | 6.35% | ― | 4.01% | 22.46% | |
70 Outperform | $2.00B | 18.69 | 8.18% | ― | -2.85% | -27.70% | |
70 Outperform | $2.47B | 29.23 | 9.08% | 2.37% | 2.14% | 5.38% | |
66 Neutral | $731.92M | 15.11 | 15.40% | 1.28% | 12.09% | -27.64% | |
64 Neutral | $8.82B | 14.87 | 4.61% | 174.99% | 3.74% | 5.11% | |
61 Neutral | $675.24M | 2.66 | -31.74% | ― | -1.37% | 75.47% | |
58 Neutral | $487.73M | ― | -6.77% | ― | -5.50% | 89.98% |
* Consumer Defensive Sector Average
Performance Comparison
CENT
Central Garden Pet
33.91
-8.24
-19.55%
HLF
Herbalife
6.63
-2.95
-30.79%
JJSF
J & J Snack Foods
126.66
-8.90
-6.57%
JBSS
John B Sanfilippo & Son
62.89
-32.12
-33.81%
SENEA
Seneca Foods
89.28
31.42
54.30%
STKL
SunOpta
4.52
-1.08
-19.29%
Central Garden Pet Earnings Call Summary
Earnings Call Date:Feb 05, 2025
(Q1-2025)
| % Change Since: -8.52%|
Next Earnings Date:May 07, 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.Q1-2025 Updates
Positive Updates
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.
Negative Updates
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.