Central Garden (CENT) Down 8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Central Garden (CENT). Shares have lost about 8% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Central Garden due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Central Garden & Pet Q1 Earnings Top Estimates, Sales Rise 3% Y/YCentral Garden & Pet Company reported solid first-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.The company delivered strong first-quarter results, driven by higher shipments, productivity gains and moderating inflation, leading to growth in both revenues and earnings. While the quarter benefited from favorable shipment timing and promotional activities, the company remains confident in its fiscal year outlook and is committed to executing Central to Home strategy with precision.CENT’s Quarterly Performance: Key Metrics & InsightsCentral Garden & Pet posted quarterly earnings of 21 cents per share, which beat the Zacks Consensus Estimate of a loss of 3 cents. Also, the figure increased from 1 cent per share reported in the prior-year period.The company reported consolidated net sales of $656.4 million, which beat the Zacks Consensus Estimate of $630 million. The metric increased 3% from $634.5 million posted in the year-ago period. This growth was driven by the timing of shipments, supported by favorable weather in the garden segment and the timing of promotional activity in the pet segment.The gross profit was $196 million compared with $178.8 million reported in the year-ago period. The gross margin expanded 160 basis points (bps) to 29.8%, driven by productivity improvements and moderating inflation.SG&A expenses of $167.7 million decreased from $170.4 million in the prior year quarter. As a percentage of net sales, the figure decreased 140 bps to 25.5%, indicating cost discipline across the organization.The operating income was $28 million, up from $8.4 million reported in the year-ago period. The operating margin expanded 300 bps to 4.3%. Adjusted EBITDA was $55.4 million compared with $37 million in the prior-year period.CENT’s Segment Wise Performance DetailsNet sales for the Pet segment were $427 million, indicating a 4% increase. This growth was driven by customers shifting orders into the fiscal first quarter and the timing of promotional activities. The segment’s operating income was $51 million, up from $43 million reported in the prior-year quarter. The adjusted operating margin expanded 140 bps to 12%, supported by productivity improvements from the Cost and Simplicity program and moderating inflation.In the Garden segment, net sales of $229 million increased 2% from the year-ago period. This growth benefited from customers shifting orders into the fiscal first quarter and favorable weather.The segment’s operating income of $2 million increased from an operating loss of $9 million reported in the prior year quarter. The operating margin improved 500 bps to 1.1%, driven by moderating inflation, productivity gains and the exit from the low-margin pottery business.CENT’s Financial Health SnapshotCentral Garden & Pet ended the quarter with cash and cash equivalents of $618 million, long-term debt of $1,190.3 million and shareholders’ equity of $1,519.1 million, excluding the non-controlling interest of $0.7 million. The company repurchased about 1.68 million shares or $52 million in the quarter under review. Management expects capital expenditures for fiscal 2025 to be in the range of $60-$70 million.Sneak Peek Into CENT’s OutlookCentral Garden & Pet estimates fiscal 2025 adjusted earnings to be $2.20 per share or more. This forecast takes into account factors such as the impact of newly proposed tariffs, deflationary pressures in certain commodity sectors, shifting consumer behavior amid ongoing macroeconomic and geopolitical uncertainty, and challenges in the traditional retail market. The outlook excludes any potential effects from acquisitions, divestitures or restructuring activities, including initiatives related to the Cost and Simplicity program.The company expects a softer second quarter of fiscal 2025 compared with the last year.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -6.58% due to these changes.VGM ScoresCurrently, Central Garden has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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Click to get this free report Central Garden & Pet Company (CENT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks