On Sep 3, 2013, Zacks Investment Research downgraded
Central Garden & Pet Company
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Estimates for Central Garden & Pet have shown a downtrend
since the company reported disappointing third-quarter results on
Aug 7, 2013.
The company's dismal performance continued into the third
quarter. The quarterly earnings of 28 cents a share missed the
Zacks Consensus Estimate of 42 cents by miles and plunged 40.4%
year over year. Top line also decreased 7% year over year to
$494.1 million and fell short of the Zacks Consensus Estimate of
$525 million. Decline in both the Pet and Garden segments and
tough year-over-year comparisons were to blame. Lower sales led
to a fall in consolidated gross profit.
We observe that Central Garden & Pet's transformation
activities are failing to show the desired results and therefore
we remain skeptical about the future prospects of the company as
the lack of improvement is dashing all hopes of recovery, at
least in the near term. The company's poor performance is evident
from its earnings surprise history.
Central Garden & Pet has missed the Zacks Consensus
Estimate in the trailing 4 quarters by an average of 16.5%, which
is a matter of concern. The lower-than-expected results triggered
a downtrend in the Zacks Consensus Estimates, as analysts become
less constructive on the stock's future performance. This is
evident from the movement witnessed in the Zacks Consensus
Estimate that dipped 35.9% to 25 cents for 2013 and 8.1% to 57
cents a share for 2014 in the past 60 days.
Other Stocks that Warrant a Look
Not all retail stocks are performing as disappointingly as
Central Garden & Pet. Other stocks worth considering include
Citi Trends, Inc.
Fortune Brands Home & Security, Inc.
Lumber Liquidators Holdings, Inc.
), all sporting a Zacks Rank #1 (Strong Buy).
CENTRAL GARDEN (CENT): Free Stock Analysis
CITI TRENDS INC (CTRN): Free Stock Analysis
FORTUNE BRD H&S (FBHS): Free Stock Analysis
LUMBER LIQUIDAT (LL): Free Stock Analysis
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