With A -13% Earnings Drop, Is Central Garden & Pet Company's (NASDAQ:CENT) A Concern?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Central Garden & Pet Company (NasdaqGS:CENT) useful as an attempt to give more color around how Central Garden & Pet is currently performing.
View our latest analysis for Central Garden & Pet
Commentary On CENT's Past Performance
CENT's trailing twelve-month earnings (from 28 December 2019) of US$87m has declined by -13% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 28%, indicating the rate at which CENT is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Central Garden & Pet has fallen short of achieving a 20% return on equity (ROE), recording 8.9% instead. Furthermore, its return on assets (ROA) of 5.6% is below the US Household Products industry of 7.2%, indicating Central Garden & Pet's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Central Garden & Pet’s debt level, has declined over the past 3 years from 13% to 8.2%.
What does this mean?
Central Garden & Pet's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Central Garden & Pet to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CENT’s future growth? Take a look at our free research report of analyst consensus for CENT’s outlook.
Financial Health: Are CENT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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