On Mar 27, 2014, we issued an updated research report on Central Garden & Pet Company (NASDAQ: CENT). Ever since the company posted narrower-than expected loss for the first quarter of fiscal 2014 on Feb. 4, 2014, estimates are northward bound.
Central Garden & Pet reported first-quarter fiscal 2014 net loss of 26 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 31 cents and loss of 32 cents reported in the year-ago quarter.
Moreover, management was upbeat on Pet and Garden Segment's overhauling initiatives, which made analysts more constructive on the stock. This was well reflected in the upward revision for the Zacks Consensus Estimate for fiscal 2014 and 2015, over the past 60 days. The estimate for fiscal 2014 increased 10.5% to 42 cents whereas for fiscal 2015 it rose 14.5% to 63 cents.
Central Garden & Pet is revamping both its Pet and Garden segments to drive profitability. The company intends to have a balanced approach that encompasses revenue growth as well as cost reduction. It also intends to launch several products that appeal to customers, while upgrading its customer service as well. Management expects its ongoing transformation efforts to yield improvement, though not linear, and expects a 2-year window to gain maximum momentum.
As the leading producer of garden and pet supplies products in the U.S., a diversified portfolio of brands has helped Central Garden & Pet to develop healthy commercial relationships with giant retailers such as Wal-Mart Stores Inc. (NYSE: WMT), The Home Depot, Inc. (NYSE: HD) and Lowe's Companies Inc. (NYSE: LOW). We believe that this provides a significant opportunity for the company to drive profitability.
In addition, the company's effective inventory management is helping it to optimize merchandise levels in accordance with sales trends. Further, Central Garden & Pet intends to evolve into an integrated, multi-brand company from a portfolio of stand-alone businesses, by restructuring and reorganizing operating units and consolidating facilities.
Currently, Central Garden & Pet carries a Zacks Rank #1 (Strong Buy).
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