Central Garden & Pet CompanyCENT is slated to report third-quarter 2018 results on Aug 1. In the trailing four quarters, it has outperformed the Zacks Consensus Estimate by an average of 9%. In the last reported quarter, this producer and marketer of lawn & garden and pet supplies products delivered a positive earnings surprise of 4.9%. Consequently, investors are keeping their fingers crossed and hoping that the company surpasses earnings estimate even this time.
How Are Estimates Faring?
After registering a bottom-line increase of 28.4% in the second quarter of 2018, Central Garden & Pet Company is likely to record year-over-year growth of 29% in the third quarter. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 80 cents compared with 62 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has remained stable in the last 60 days but witnessed an increase of 4 cents in the past 90 days.
Analysts polled by Zacks now project revenues of $612.6 million, up roughly 6.6% from the year-ago quarter. If all goes well, this may be the seventh straight quarter of top-line beat for the company. We note that total revenue of this Walnut Creek, CA-based company had increased 7.6% in the last reported quarter.
Let's delve deeper and find out the factors impacting the results.
Factors Holding Key to Performance
Management is revamping both Pet and Garden segments and applies a balanced approach that encompasses improvement in revenues and profits through operational efficiency. We believe that improved product offerings, strategic investments such as acquisitions of General Pet Supply and Bell Nursery, growth in e-commerce and cost containment efforts bode well. These strategic endeavors are likely to drive top and bottom-line growth.
The company intends to gain market share in the home centers, mass market, grocery, specialty pet store and other independent channels. In the second quarter, the Pet and Garden segments reported revenue increase of 7.8% and 7.3%, respectively.
However, any increase in cost of goods sold and occupancy, SG&A and interest expenses may weigh upon the company's earnings. Further, seasonality of garden business also remains a concern. We note that net interest expense rose to $9.9 million in the second quarter from $6.8 million in the prior-year period. SG&A expenses in the last reported quarter rose 7.5%.
Central Garden & Pet Company Price, Consensus and EPS Surprise
What the Zacks Model Unveils?
Our proven model does not conclusively show that Central Garden & Pet Company is likely to 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 Company has a Zacks Rank #3 but an Earnings ESP of 0.00%, makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .
Stocks With Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Columbia Sportswear Company COLM has an Earnings ESP of +19.90% and a Zacks Rank #1.
Urban Outfitters URBN has an Earnings ESP of +1.46% and a Zacks Rank #2.
Costco COST has an Earnings ESP of +1.30% and a Zacks Rank #3.
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