Things to Consider Ahead of CENT’s Upcoming Results

Central Garden & Pet has been navigating a challenging environment marked by shifting market dynamics and reduced consumer spending. These factors are likely to have impacted both Pet and Garden segments. We foresee sales from Pet and Garden segments to decline 0.5% and 1%, respectively, in the fiscal first quarter.

Post-pandemic trends, such as declining pet ownership and reduced discretionary spending, impacted the durable pet products category, which saw double-digit declines in the last reported quarter. Combined with SKU rationalization and competition from low-cost imports, these factors present a complex challenge. 

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.

The company has been battling rising selling, general and administrative (SG&A) expenses. Any deleverage in SG&A is likely to have impacted the profitability. We anticipate SG&A expenses, as a percentage of net sales, to increase 40 basis points in the fiscal first quarter.

Despite challenges, CENT has made strides with its Cost and Simplicity program, which has focused on reducing expenses and improving productivity. Through initiatives like facility consolidation, integrated operations and centralized logistics, the program has bolstered operational efficiency and agility. This progress is expected to have mitigated some of the bottom-line pressure.

What the Zacks Model Unveils for CENT

Our proven model doesn’t conclusively predict an earnings beat for Central Garden & Pet Company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Central Garden & Pet Company currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

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

The Honest Company, Inc. HNST has an Earnings ESP of +50.00% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

HNST’s top line is anticipated to advance year over year when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $96.4 million, which indicates a 6.8% rise from the figure reported in the year-ago quarter. 

The consensus estimate for The Honest Company’s loss is pegged at 2 cents per share, down 300% from the year-ago quarter. HNST delivered a trailing four-quarter earnings surprise of 80%, on average.

Kellanova K has an Earnings ESP of +0.69% and currently carries a Zacks Rank of 3. K’s top line is anticipated to decrease year over year when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.09 billion, which indicates a 2.5% fall from the figure reported in the year-ago quarter. 

The company is expected to register an increase in the bottom line. The consensus estimate for Kellanova’s fourth-quarter earnings is pegged at 82 cents per share, up 5.1% from the year-ago quarter. K delivered a trailing four-quarter earnings surprise of 10.9%, on average.

lululemon athletica inc. LULU has an Earnings ESP of +0.25% and a Zacks Rank of 2 at present. The company is expected to register top and bottom-line increases when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for LULU’s quarterly earnings has risen 18 cents in the past 30 days to $5.83 per share, which indicates an increase of 10.2% from the prior-year quarter.

The consensus mark for lululemon athletica’s quarterly revenues is pegged at $3.57 billion, which indicates an increase of 11.5% from the year-ago quarter. LULU delivered a trailing four-quarter earnings surprise of 6.7%, on average.