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Central Garden & Pet Company Message Board

  • EasyVinh EasyVinh Nov 18, 1999 10:52 AM Flag

    cent got up grade to buy from first

    union.

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    • I think one time write offs may be as much as the earnings estimate. I think the .10 is an estimate of earnings before one time charge offs.

    • What do you---animus, hookem and anyone
      else---think the effect on the share price would be from a
      simultaneous announcement of write-offs big enough to make
      next week's earnings less than the dime concensus and
      news that distribution will be spun off into a
      separate company?

    • I have no access to other information. I am in
      the industry and everything I said was just opinion.
      Looking from the outside. They may have wonderful news
      regarding expense reductions (if not now I think they will
      by year end 2000 if expenses don't go down they will
      be forced to make some hard decisions quick.) I have
      heard that some merchandisers have been laid off and a
      few salesmen have left the company for some reason or
      another. It just seems to me that there is more
      opportunity to cut expenses but there may not be. I am
      certainly not in the position to know the answers to
      that.

      I am LONG, LONG, LONG on this one and I think in
      the next 12 months all longs will be happy investors.


      Just play with the sales and the margins and see the
      per share effects of small improvements.

      I do
      think we will here about small acquistions in the next
      couple of months.

    • Nice to see someone here who has done some work
      on the company. I took a starter position when I saw
      the Wasserstein upgrade plus the corporate buybacks
      plus Brown's purchase. I have read the CENT 10K and
      other filings in some detail and I couldn't agree more
      that they downplayed the loss of the Solarius
      business. I think you have some tax loss selling here. More
      important, the Strong fund posted an amended 13g showing
      that they had sold several million shares. Of course,
      that fund has been having problems and may have done
      it for tax reasons. Lastly, who wants a lawn and
      garden company when you can buy AOL. But that will
      change.

    • Thanks for your reply.

      You said you're
      disappointed that you haven't seen more cost reductions. Is
      that based on the company's public statements (or lack
      thereof) on the topic, or do you have other access to that
      type of information?

      Thanks -

    • I think qtr 2's report in April is the most
      important. CENT maintains that Solarius cost them only $15
      million in gross profits. We will be able to see that in
      April. It was my understanding that most of those sale
      were drop shipments and if that is so one would assume
      they were made early in the season.

      I have not
      seen the major cost reductions and I am little
      disappointed in that. I would suspect that the lawn and garden
      distribution companies have resisted making cuts and will try
      to prove they are worth something. (In my opinion
      there are some glaring opportunities for cost control
      by simply combining CENT and Pennington
      distribution. They do the same thing for lots of the same
      customers. If you ask a CENT employee why there hasn't been
      anything done along those lines they say "politics." Most
      that I have talked to agree it needs to me done.


      An even larger opportunity exist to combine pet and
      l&g distribution but lots of people think that
      doesn't work---maybe they should reorganize all their
      distribution along function lines rather than industry lines.
      Perhaps they could have "pet distribution sales teams"
      and "lawn & garden distribution sale teams" that work
      out of a common "CENT Logistics Center." Logistics
      would charge each team according to it's sales and
      would concentrate on warehousing and trucking
      efficeincies.)(no charge for the ideas)

      Given all that I
      still expect better than current EPS estimates for
      2000. I think one of the great things about this
      investment is that the problems that need solving are easy
      to see and that given the $1 billion+ sales and
      smaller float the rewards for operational and margin
      improvement are quite substanial.

    • I agree that the reduced share count is the key
      factor. Any operating gains will be greatly
      magnified.

      Regarding acquisitions, I doubt we'll see any significant
      ones soon, as most of CENT's available cash has been
      used for share repos and doing a stock deal makes no
      sense at these CENT prices. HOWEVER, once the operating
      gains hit, eps and share price should rocket up, making
      stock acquisitions again viable, adding to earnings
      growth, etc.

      Regarding the upcoming conference
      call, what are people's thoughts? I'm sure CENT will
      announce (i) a large restructuring charge related to
      termination of the Solaris agreement, (ii) expense cuts, and
      (iii) projection for FY 00 sales and net income.
      Assuming they announce a $1.15-$1.30/sh estimate, will the
      street believe it and put a reasonable multiple (like
      maybe 10x) on it or take a "show me" attitude and we
      won't see any price movement until Q1 results are
      announced??

    • My thoughts exactly regarding Wasser, they didn't
      pick CENT out of thin air. And it was a strong buy,
      which is somewhat unusual for an initial coverage.
      Also, as I tried to convey tongue in cheek in a
      previous post, I doubt Brown bought his shares in some
      sort of lame attempt to prop the stock price up. Has
      anyone else noticed the swings during the day, like
      today of almost a point. I wonder if some of this can
      be attributed to the reduced float, and what that
      portends if this stock ever does come under heavy
      accumulation.

    • 1) Wasserstein had to have some idea what next
      week's earnings announcement will be.

      2)Any
      profitable acquistion will have a much bigger stock effect
      than before the buyback. If an acquistion was making
      $5million per year that would translate to $0.25 per share.
      At today's paltry P/E that would add $1.70 or 22% to
      the stock price.

      3) Same holds true for
      expense reductions and margin increases--all will now be
      spread over a much smaller base.

      This is one of
      the best value plays I have studied.

    • I can promise you Brown is NOT worried about his fellow share holders.

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