Central Garden & Pet (NASDAQ:CENT) Surprises With Q1 Sales
Stock Story
Published May 08, 2024 05:20PM ET
Updated May 08, 2024 05:30PM ET
Central Garden & Pet (NASDAQ:CENT) Surprises With Q1 Sales
Pet company Central Garden & Pet (NASDAQGS:CENT) reported results ahead of analysts' expectations in Q1 CY2024, with revenue flat year on year at $900.1 million. It made a non-GAAP profit of $0.99 per share, improving from its profit of $0.90 per share in the same quarter last year.
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Central Garden & Pet (CENT) Q1 CY2024 Highlights:
- Revenue: $900.1 million vs analyst estimates of $887.5 million (1.4% beat)
- EPS (non-GAAP): $0.99 vs analyst estimates of $0.76 (29.4% beat)
- Gross Margin (GAAP): 31%, up from 28.6% in the same quarter last year
- Free Cash Flow was -$33.87 million compared to -$79.91 million in the previous quarter
- Organic Revenue was up 1% year on year
- Market Capitalization: $2.37 billion
Household ProductsHousehold products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.
Sales GrowthCentral Garden & Pet is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 2.9% over the last three years was weak for a consumer staples business.
This quarter, Central Garden & Pet's revenue fell 1% year on year to $900.1 million but beat Wall Street's estimates by 1.4%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
Central Garden & Pet has shown decent cash profitability, giving it some flexibility to reinvest. The company's free cash flow margin averaged 6.3% over the last two years, slightly better than the broader consumer staples sector.
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Furthermore, Central Garden & Pet's margin expanded by 8.1 percentage points during that time, giving it multiple ways to win.
Central Garden & Pet burned through $33.87 million of cash in Q1, equivalent to a negative 3.8% margin. The company's cash burn increased by 26.8% year on year.
Key Takeaways from Central Garden & Pet's Q1 Results We were impressed by how significantly Central Garden & Pet blew past analysts' organic revenue growth and EPS expectations this quarter. On the other hand, its full-year earnings forecast was underwhelming. Overall, we think this was decent quarter. The stock is up 1.1% after reporting and currently trades at $42.19 per share.
Written By: Stock Story
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