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How Central Garden & Pet (CENT) Looks Ahead of Q1 Earnings

Zacks Equity Research
·3 min read

Central Garden & Pet Company CENT is scheduled to release first-quarter fiscal 2020 results on Feb 5, after the closing bell. The leading producer and distributor of lawn and garden products reported a negative earnings surprise of 76.5% in the preceding quarter.

The Zacks Consensus Estimate for the quarter is pegged at a loss of 12 cents, suggesting deterioration from the year-ago earnings of 3 cents.

The consensus estimate for quarterly revenues is pegged at $472.3 million, which indicates growth of 2.2% from the year-ago quarter.

Key Factors to Note

In the last earnings call, Central Garden & Pet had informed that unfavorable timing of orders in the quarter, continued sluggishness in the animal health businesses and rising corporate expenses are likely to hurt the first-quarter fiscal 2020 bottom line. Moreover, the company has been witnessing a rise in SG&A expenses for a while on account of higher selling and delivery expenses as well as warehouse and administrative costs. We note that management had earlier projected loss of 10-15 cents per share for the first quarter.

Nonetheless, robust organic sales growth in the Garden and Pet segments as well as contributions from the C&S and Arden acquisitions has been boosting revenues for the company. Also, the company has been steadily making strides in advancing its digital capabilities and optimizing supply chain. Moreover, in order to cushion margin performance, management is focusing on lowering cost of goods sold.

Central Garden & Pet Company Price and EPS Surprise

Central Garden & Pet Company Price and EPS Surprise
Central Garden & Pet Company Price and EPS Surprise

Central Garden & Pet Company price-eps-surprise | Central Garden & Pet Company Quote

We note that the consensus estimate for first-quarter sales for the Garden and Pet segments is pegged at $128 million and $351 million, respectively, suggesting year-over-year growth of 4.9% and 3.2%.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Central Garden & Pet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Central Garden & Pet carries a Zacks Rank #3, it has an Earnings ESP of 0.00%.

Stocks With a Favorable Combination

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Zumiez Inc. ZUMZ currently has an Earnings ESP of +0.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores, Inc. ROST currently has an Earnings ESP of +2.84% and a Zacks Rank #2.

Crocs, Inc. CROX presently has an Earnings ESP of +30.00% and a Zacks Rank #3.

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Central Garden & Pet Company (CENT) : Free Stock Analysis Report
 
Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
 
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Crocs, Inc. (CROX) : Free Stock Analysis Report
 
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