Central Garden & Pet (CENT) Q4 Earnings: What To Expect On Tuesday

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Central Garden & Pet Company (NASDAQGS:CENT) is scheduled to report Q4 earnings results on November 26, 2019, at 4:30 PM ET.

The company is expected to report earnings of $0.17/share on revenue of $522 million. The consensus earnings per share (EPS) of $0.17/share is based on a poll of 6 analysts and represents a growth of 70.0% over the same quarter last year when the company reported earnings of $0.10/share.

The revenue forecast of $522 million based on a poll of 5 analysts implies a year-over-year (YoY) growth of 3.9%. Last year the company reported $502.3 million in revenue for the quarter.

Expected to report EPS growth of $0.07/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $522.00 $502.31 3.9%
EPS $0.17 $0.10 70.0%

As outlined in the company’s last presentation, Central Garden & Pet Company derives approximately 61% of sales from branded and private label pet products and 39% from lawn & garden products. While it was founded in 1980 as a distribution company, today only 21% of sales are derived from distribution.

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Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters. What are your expectations from Central Garden & Pet for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.85 $0.80 -6.2% Missed
Q2, 2019 $0.69 $0.72 4.3% Beat
Q1, 2019 $0.14 $0.03 -78.6% Missed
Q4, 2018 $0.09 $0.10 11.1% Beat
Q3, 2018 $0.78 $0.79 1.3% Beat
Q2, 2018 $0.82 $0.86 4.2% Beat
Q1, 2018 $0.15 $0.19 26.7% Beat
Q4, 2017 $0.09 $0.08 -5.9% Missed

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Central Garden & Pet’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 29, 2019, the stock price reacted by falling by -22.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-01 $30.38 $23.43 -22.9% Decline
2019-05-06 $27.57 $28.80 4.5% Increase
2019-02-06 $39.62 $31.31 -21.0% Decline
2018-11-27 $30.99 $31.78 2.5% Increase

Fundamentals And Technical Analysis

Central Garden & Pet is currently trading at $31.60/share, down -0.3% for the day. The company is trading at approximately 77.9% of its 52-week high of $40.59/share. The company’s stock price is up 34.9% since the last earnings report and down -0.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 57.44 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 17.0x and a forward P/E multiple of 17.2x.

Central Garden & Pet’s current share price also implies a price-to-book (P/B) multiple of 1.7x. The following table summarizes some other key fundamental ratios:

Data as of November 26, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 29, 2019
Stock Price (Current) $31.60
P/E Ratio 17.0x
P/E Ratio (Fwd) 17.2x
PEG Ratio 1.9
Total Debt to Capital (%) 28.7%
Levered Free Cash Flow $157.4 million
Enterprise Value / EBITDA 9.3x

Source: Finbox

Company Profile: Central Garden & Pet Company

Central Garden & Pet Company is a small-cap stock with a market capitalization of $1.754 billion and a total enterprise value of $2.002 billion. The company operates in the Consumer Staples sector and Household Products industry.

Central Garden & Pet Company produces and distributes products for the lawn and garden, and pet supplies markets in the United States. It operates through two segments, Pet and Garden.

The Pet segment supplies products for dogs and cats, including edible bones, edible and non-edible chews, dog and cat food and treats, toys, pet carriers, grooming supplies, and other accessories; and products for birds, small animals, and specialty pets, such as food, cages and habitats, toys, chews, and related accessories. It also provides animal and household health and insect control products; live fishes; and products for fish, reptiles, and other aquarium-based pets comprising aquariums, furniture, and lighting fixtures, pumps, filters, water conditioners, food and supplements, and information and knowledge resources; and products for horses and livestock. This segment sells its products to independent pet distributors, retail chains, grocery stores, mass merchants, and bookstores under the Adams, Aqueon, Avoderm, Cadet, Farnam, Four Paws, Kaytee, K&H Pet Products, Nylabone, Pinnacle, TFH, Zilla, Altosid, Comfort Zone, Coralife, Interpet, Kent Marine, Pet Select, and Zodiac brands.

The Garden segment provides grass seed; wild bird feed, bird feeders, birdhouses, and other birding accessories; weed, grass, and other herbicides, as well as insecticide and pesticide products; fertilizers; and decorative outdoor lifestyle products that include pottery, trellises, and other wood products, as well as live plants. This segment sells its products to retail chains, independent garden distributors, grocery stores, nurseries, and garden supply retailers under the AMDRO, Ironite, Pennington, Sevin, Lilly Miller, Over-N-Out, Smart Seed, and The Rebels brands.

The company also distributes third-party products.

Central Garden & Pet Company was founded in 1955 and is based in Walnut Creek, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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