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Central Garden & Pet Widens Garden Segment, Buys Bell Nursery

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Central Garden & Pet Company CENT recently acquired Bell Nursery Holdings, LLC, the mid-Atlantic’s leading commercial grower of flowers and plants. The buyout, which is likely to be accretive in fiscal 2018, will augment the company’s diversified garden products portfolio and produce synergic growth.

Management sees immense growth potential in the live-plant arena compared with the entire garden industry and Bell Nursery’s live plant business will act as a catalyst. Headquartered in Maryland, Bell Nursery also owns facilities in North Carolina, Maryland, Virginia, Ohio and Delaware. Post-acquisition, the management team at Bell Nursery will be retained by Central Garden & Pet, who will jointly work to boost growth.

We believe that the buyout of Bell Nursery will enhance Central Garden & Pet’s services to the customers and quality products.

In addition, Central Garden & Pet is revamping both Pet and Garden segments. The company intends to have a balanced approach that encompasses revenue growth as well as cost reduction. It also intends to launch several products which will appeal to customers and upgrade customer service. Management expects ongoing transformation efforts to yield results in near future.

Further, the company intends to gain market shares in the home centers, mass market, grocery, specialty pet store and other independent channels. In the first quarter of fiscal 2018, both the Pet and Garden segments reported revenue growth of 6.9% and 1.3%, respectively, year over year.

Stock Performance

In the past three months, shares of Central Garden & Pet gained 5.3% against the industry’s decline of 7.8%. This outperformance can be attributed to this Zacks Rank #2 (Buy) company’s strategic endeavors and robust first-quarter fiscal 2018 results.

Organic growth, value accretive acquisitions and divestment of non-strategic assets bode well for the stock. Recently, it reported quarterly results, wherein the top and bottom lines outpaced the Zacks Consensus Estimate and grew year over year. Results gained from improved product offerings, strategic investments, growth in e-commerce and cost containment efforts. Consequently, management expects fiscal 2018 adjusted earnings per share to increase by 23.3% or higher.

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