Central Garden & Pet Beats Estimate - Analyst Blog
May 05 2011 - 3:15AM
Zacks
Central Garden & Pet
Company (CENT) recently announced healthy second-quarter
2011 results. The company delivered a quarterly income of 54 cents
a share, beating the Zacks Consensus Estimate and prior-year
quarter’s income of 49 cents.
With respect to earnings surprises,
Central Garden & Pet has missed the Zacks Consensus Estimate in
three of the last four quarters. Compared with the Zacks Consensus
Estimate, the earnings surprise ranges from a negative 114.3% to a
positive 10.2%, the average being negative 43.3%. This signifies
that Central Garden & Pet has underperformed the Zacks
Consensus Estimate by 43.3% on an average in the last four
quarters.
As per Central Garden & Pet,
total revenue for the quarter increased 10.0% to $485.7 million,
reflecting significant sales growth in garden products segment. The
company’s total branded product sales climbed 13.0% to $417.3
million, whereas sales of other manufacturers’ products went down
7.6% to $68.4 million.
The reported net sales also
surpassed the Zacks Consensus Revenue Estimate of $457.0
million.
During the reported quarter, gross
profit inched up 1.3% to $163.3 million, whereas gross margin
contracted 290 basis points to 33.6%. The decline in margin
reflected a 14.9% rise in input costs. Total operating income for
the quarter was $59.6 million, down 1.5% from $60.5 million in the
year-ago quarter, reflecting the company’s increased spending on
brand building coupled with accelerating commodity prices.
Central Garden & Pet, one of
the leading producers and marketers of premium and value-oriented
products, is focused on the lawn & garden and pet supplies
markets in the U.S.
Garden Products segment sales
jumped 19.0% to $260.3 million driven by the growth in its grass
seed business coupled with the sales rise in garden chemicals and
control business. The segment reported an operating income of $46.9
million compared with $36.8 million posted in the previous-year
quarter.
Pet Products segment sales inched
up 1.0% to $225.4 million and the segment’s operating income
plunged 33.0% to $23.3 million, reflecting a continued rise in raw
material costs.
Central Garden & Pet, which
faces stiff competition from The Scotts Miracle-Gro
Company (SMG), ended the quarter with cash and cash
equivalents of $11.2 million, total long-term debt of $517.1
million and shareholders’ equity of $502.9 million, excluding a
non-controlling interest of $0.5 million.
On July 15, 2010, the
company’s board authorized a new $100 million share repurchase
program. During the quarter under review, the company bought back
$39.0 million of its shares.
Followed by a broad evaluation, we
prefer to maintain our long-term ‘Underperform’ recommendation on
the stock. Moreover, Central Garden & Pet holds a Zacks #3
Rank, which translates into a short-term ‘Hold’ rating.
CENTRAL GARDEN (CENT): Free Stock Analysis Report
SCOTTS MIRCL-GR (SMG): Free Stock Analysis Report
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