Central Garden & Pet's (CENT) Q2 Earnings: What's in Store?

Central Garden & Pet CompanyCENT is expected to report second-quarter fiscal 2018 results on May 2.

Last quarter, the company reported a positive earnings surprise of 26.7%. The question that looms large is whether this leading lawn & garden and pet supplies' producer and marketer will be able to pull off a positive earnings surprise in the to-be-reported quarter.

Let's see how things are shaping up prior to the earnings announcement.

Which Way Are Estimates Headed?

In order to get a clear picture of what analysts think about the company right before the earnings release, let's take a look at the earnings estimate revisions.

Central Garden & Pet Company Price, Consensus and EPS Surprise

Central Garden & Pet Company Price, Consensus and EPS Surprise | Central Garden & Pet Company Quote

The Zacks Consensus Estimate for the fiscal second quarter is pegged at 85 cents, which has remained stable over the past 60 days. Also, the estimate reflects year-over-year growth of 26.9% from 67 cents in the prior-year quarter.

Further, analysts polled by Zacks expect revenues of $598.1 million for the quarter, up nearly 4.9% from the year-ago quarter. Moreover, the consensus estimates for net sales at the Pet and the Garden segments are currently pegged at $312 million and $282 million, respectively. In the year-ago quarter, the company registered net sales of $298.4 million and $271.5 million for the Pet and the Garden segments, respectively.

Factors Influencing Q2

Organic growth, value accretive acquisitions and divestment of non-strategic assets have been the major strengths of Central Garden & Pet. Management is also revamping the Pet and the Garden segments and aims to have a balanced approach that encompasses improvement in revenues and profits through operational efficiency. Additionally, Central Garden & Pet's diversified portfolio of brands, e-commerce endeavors and effective inventory management are expected to drive growth.

The company intends to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels. In the first quarter of fiscal 2018, the Pet and Garden segments reported year-over-year revenue growth of 6.9% and 1.3%.

However, any increase in SG&A and interest expenses may hurt investor sentiment. Further, seasonality of business remains a concern. We noted that net interest expense rose to $7.2 million in the first quarter from $6.8 million in the prior-year period. SG&A expenses in the last reported quarter rose 9%.

What the Zacks Model Unveils

Our proven model does not conclusively showthat Central Garden & Petwill beat estimates this quarter. A stock needs to have both - a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP - for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Central Garden & Pet has a favorable Zacks Rank #3 but an Earnings ESP of 0.00%. Consequently, surprise prediction is difficult for such cases.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Costco Wholesale Corporation COST has an Earnings ESP of +1.20% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Party City Holdco Inc. PRTY has an Earnings ESP of +42.86% and a Zacks Rank #3.

SodaStream International Ltd. SODA has an Earnings ESP of +6.06% and a Zacks Rank #3.

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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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