Central Garden & Pet Company CENT has seen its stock price plummet 14% in a month against the industry’s 0.5% growth. This decline can be traced to tough broader market dynamics and specific challenges faced by the company. Investors are currently divided on whether the stock is set for a further decline or is on the verge of a recovery.

CENT Stock One Month Performance

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After a 2.5% decline during Friday’s session, the stock is now trading at $35.15, inching closer to its 52-week low of $32.17 attained on Oct. 8, 2024. CENT stock is trading below critical technical thresholds, including its 50 and 200-day moving averages.

CENT Trades Below 50 & 200-Day Moving Averages

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What is Dragging the CENT Stock Down?

Shifting market dynamics, unfavorable weather conditions and reduced consumer spending created significant challenges for Central Garden & Pet in the fourth quarter of fiscal 2024. These factors weighed heavily on the company’s Pet and Garden segments, leading to year-over-year declines in both revenues and earnings. The results highlight the growing need for CENT to adapt its strategies and navigate an evolving economic landscape.

CENT’s Pet segment experienced a tough fourth quarter with a 10% drop in sales and a 14% decline in organic net sales. Post-pandemic trends, such as declining pet ownership and reduced discretionary spending, impacted the durable pet products category, which saw double-digit declines. Combined with SKU rationalization and competition from low-cost imports, these factors present a complex challenge. The outlook for fiscal 2025 indicates further mid-single-digit declines in durable products, signaling continued headwinds for the segment.

Meanwhile, the Garden segment recorded a 12% decline in sales and an 11% drop in organic net sales, largely due to lapping the prior year’s extra week. Despite the challenges, there were silver linings, including higher foot traffic in home centers and strong grass seed sales, which offered some resilience against broader market pressures.

CENT faces substantial exposure to tariffs with approximately 60% of its imports sourced from China. While this is a reduction from prior years, tariffs still account for roughly 5% of CENT’s cost of goods sold. Any escalation in geopolitical tensions or changes in trade policies could further inflate costs, especially for durable pet products that are already struggling with demand. 

CENT’s guidance for fiscal 2025 highlights the uphill battle it faces with an expected adjusted loss of 5 cents per share or better in the first quarter compared with 1 cent reported in the prior year.

How the Zack Consensus Estimate Stack Up for CENT

CENT is currently in a tough spot. The Zacks Consensus Estimate for EPS has seen downward revisions. In the past 60 days, the consensus estimate for the current and the next fiscal year has decreased 18 cents to $2.22 and 24 cents to $2.33 per share, respectively. 

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Unlocking CENT’s Valuation

Central Garden & Pet’s forward 12-month price-to-earnings ratio is 15.62X, higher than the industry’s ratio of 13.04X. This indicates that investors may be paying a high price relative to the company's expected earnings growth.

CENT Stock Looks Overvalued

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Can CENT’s Strategy Uplift Performance?

Central Garden & Pet’s strategic initiatives are driving meaningful improvements across its operations. The Cost and Simplicity program has been pivotal in reducing expenses and boosting productivity through streamlined processes, such as facility consolidation, integrated operations and centralized logistics. This has enhanced CENT’s operational agility, positioning it well to navigate industry challenges.

On the digital front, CENT’s emphasis on e-commerce is creating significant growth opportunities. Strategic investments in search engine optimization, content enhancement and inventory management tools have led to notable improvements in conversion rates and an expanded online market presence. These advancements highlight the company’s ability to adapt to evolving consumer behaviors.

CENT’s Investment Analysis

Central Garden & Pet Company faces significant challenges, including declining consumer demand, tariff pressures and underperformance in key segments. Coupled with downward estimate revisions and a breach of critical technical levels, the stock’s outlook remains shaky. For now, investors may consider exploring other opportunities. CENT currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Freshpet Inc. FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. The company currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 228.6%, respectively, from the prior-year reported levels. FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.

Petco Health and Wellness Company, Inc. WOOF operates as a health and wellness company and focuses on enhancing the lives of pets, pet parents and its Petco partners. It currently carries a Zacks Rank #2 (Buy). WOOF delivered a trailing four-quarter earnings surprise of 16.7%, on average. 

The Zacks Consensus Estimate for Petco Health and Wellness’ current-quarters earnings indicates in-line growth from the year-ago reported number.

Kellanova K manufactures and markets snacks and convenience foods. It currently carries a Zacks Rank #2. K delivered an earnings surprise of 10.9% in the last reported quarter.

The Zacks Consensus Estimate for Kellanova’s current fiscal-year earnings indicates growth of 16.1% from the prior-year reported levels.

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