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Can Central Garden & Pet (CENT) Keep its Bull Run Alive?

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The year 2016 has been a memorable one for Central Garden & Pet CompanyCENT wherein the company's stock more than doubled. Moreover, the stock has outperformed the Zacks categorized Consumer Product-Miscellaneous Discretionary industry, which has gained 14.4% so far in 2016. Better-than-expected earnings for nine consecutive quarters, gross margin uptrend and strategic efforts have been driving the company's shares higher.

Organic growth, value accretive acquisitions such as that of the pet bedding business and divestment of non-strategic assets have been aiding the company to enhance its portfolio, resulting in the improved performance. The company anticipates fiscal 2017 earnings per share of $1.34, up approximately 6% from the prior year.

Central Garden & Pet Company's gross margin has shown constant improvement in the past four quarters. Improvement in gross margin can be attributed to the efforts toward improving manufacturing efficiency, exit from the holiday decor business which was hurting the margin and also due to lower raw material costs. In fourth-quarter fiscal 2016, gross profit increased 11.3% to $120.2 million, while gross margin expanded 120 basis points (bps) to 29.1%.

Central Garden & Pet is revamping both its Pet and Garden segments. The company intends to have a balanced approach that encompasses revenue growth as well as cost reduction. Further, it intends to launch several products that appeal to customers, as well as upgrade its customer service. Management expects its ongoing transformation efforts to yield results in the near future. The company intends to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels.

Moreover, the Zacks Rank #1 (Strong Buy) company has long-term earnings growth rate of 10% and a VGM Score of "A", which gives an indication about the company's inherent strength.

Other Stocks to Consider

Other similarly-ranked stocks which warrant a look in the sector includes The Container Store Group, Inc. TCS , FTD Companies, Inc. FTD and SodaStream International Ltd. SODA . All these socks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Container Store Group has an impressive long-term earnings growth rate of 47.1%.

FTD Companies has surpassed the Zacks Consensus Estimate of earnings in the trailing four quarters, with an average earnings beat of 139.7% and has long-term earnings growth rate of 20%.

SodaStream International has reported better-than-expected earnings in the trailing four quarters, with an average earnings beat of 104.2%.

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CENTRAL GARDEN (CENT): Free Stock Analysis Report

SODASTREAM INTL (SODA): Free Stock Analysis Report

FTD COS INC (FTD): Free Stock Analysis Report

CONTAINER STORE (TCS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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