Group 1 - Central Garden (CENTA) shares have increased by 0.2% over the past four weeks, closing at $31.32, with a mean price target of $42.20 indicating a potential upside of 34.7% [1] - The average price targets from analysts range from a low of $34 to a high of $50, with a standard deviation of $5.93, suggesting a variability in estimates [2] - Analysts show strong agreement on CENTA's ability to report better earnings, with a positive trend in earnings estimate revisions correlating with potential stock price increases [4][9] Group 2 - Over the last 30 days, the Zacks Consensus Estimate for CENTA's current year earnings has increased by 6.8%, with three estimates moving higher and no negative revisions [10] - CENTA holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [11] - While consensus price targets may not be reliable for predicting the extent of gains, they can provide a directional guide for price movement [12]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates involves navigating inherent risks and volatility [1] Group 1: Company Overview - Central Garden (CENTA) is currently highlighted as a recommended growth stock, benefiting from a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 5.1%, with projected EPS growth of 9.1% this year, surpassing the industry average of 8.6% [4] Group 2: Financial Metrics - Central Garden's year-over-year cash flow growth stands at 8.7%, significantly higher than the industry average of 1.8% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 11.4%, compared to the industry average of 3.6% [6] Group 3: Earnings Estimates - The current-year earnings estimates for Central Garden have increased by 7.1% over the past month, indicating a positive trend in earnings estimate revisions [8] - The combination of a Growth Score of B and a Zacks Rank 1 suggests that Central Garden is positioned as a potential outperformer for growth investors [10]

Group 1 - Central Garden & Pet Company (CENTA) is experiencing significant activity in the options market, particularly with the March 21, 2024 $20 Put showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Analysts have a mixed outlook on Central Garden & Pet Company, with no earnings estimates increased in the last 60 days and three analysts reducing their estimates, leading to a decrease in the Zacks Consensus Estimate from $1.01 to $0.95 per share [3] Group 2 - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on such options, hoping the stock does not move as much as expected by expiration [4]

Core Viewpoint - Central Garden (CENTA) shares have increased by 10.1% in the past four weeks, closing at $32.86, with a potential upside indicated by Wall Street analysts' price targets suggesting a mean estimate of $41.60, representing a 26.6% upside [1] Price Targets - The average price target consists of five short-term estimates ranging from a low of $31 to a high of $50, with a standard deviation of $7.02, indicating variability among analysts [2] - The lowest estimate suggests a decline of 5.7% from the current price, while the highest estimate indicates a potential upside of 52.2% [2] Analyst Sentiment - There is strong agreement among analysts regarding CENTA's ability to report better earnings than previously predicted, which supports the view of potential upside [4] - The Zacks Consensus Estimate for the current year has risen by 7.1% over the past month, with two estimates increasing and no negative revisions [10] Zacks Rank - CENTA holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating a strong potential upside [11] Earnings Estimate Revisions - Increasing optimism among analysts about CENTA's earnings prospects is reflected in the upward revisions of EPS estimates, which have shown a strong correlation with near-term stock price movements [9]

Financial Performance - The total net sales for the three months ended December 28, 2024, were $656.4 million, an increase from $634.5 million for the same period in 2023, representing a growth of approximately 3.4%[93] - The Pet segment generated net sales of $427.5 million, up from $409.2 million, while the Garden segment saw sales increase from $225.3 million to $229.0 million[93] - Operating income for the total company was $28.0 million for the three months ended December 28, 2024, compared to $8.4 million in the prior year, indicating a significant improvement[93] - Net income attributable to Central Garden & Pet Company was $14.0 million for the three months ended December 28, 2024, compared to $430,000 for the same period in 2023, reflecting a substantial increase[93] - The company reported a basic earnings per share (EPS) of $0.22 for the three months ended December 28, 2024, compared to $0.01 for the same period in 2023[89] - Total revenue for the three months ended December 28, 2024, was $656.4 million, an increase from $634.5 million for the same period in 2023, representing a growth of approximately 3.1%[95] - The Pet Segment generated $427.5 million in revenue for the three months ended December 28, 2024, compared to $409.2 million in the same period of 2023, reflecting a growth of about 4.9%[95] - The Garden Segment reported revenues of $228.9 million for the three months ended December 28, 2024, up from $225.3 million in the same period of 2023, indicating a growth of approximately 1.6%[95] Cash and Cash Equivalents - The company reported cash and cash equivalents of $618,020 thousand as of December 28, 2024, compared to $341,419 thousand on December 30, 2023, indicating a significant increase of 81.0%[36] - Total cash, cash equivalents, and restricted cash amounted to $632,669 thousand as of December 28, 2024, up from $355,619 thousand a year earlier, reflecting an increase of 77.7%[36] Acquisitions and Goodwill - The company acquired TDBBS, LLC for approximately $60 million, enhancing its portfolio in the pet segment and eCommerce capabilities[54] - The company reported goodwill of $4,925 thousand as part of the acquisition of TDBBS, reflecting the premium paid over the net tangible assets acquired[56] Debt and Liabilities - The Company has long-term debt totaling $1,190.4 million as of December 28, 2024, which is slightly up from $1,189.6 million as of December 30, 2023[66] - The Company incurred approximately $6 million in debt issuance costs related to the issuance of $400 million 5.125% Senior Notes due 2031[69] - The Company has $300 million in Senior Notes due February 2028, $500 million in Senior Notes due October 2030, and $400 million in Senior Notes due April 2031, all with a fixed interest rate of 5.125%[66] - The Company’s total liabilities include current liabilities of $9,094 thousand and long-term lease liabilities of $3,727 thousand related to the acquisition of TDBBS[56] Inventory and Assets - Total inventories, net, decreased to $815,782 thousand as of December 28, 2024, from $948,398 thousand on December 30, 2023, representing a decline of 14.0%[57] - The company had total assets of $3.54 billion as of December 28, 2024, an increase from $3.42 billion a year earlier[93] Intangible Assets - The Company recorded total other intangible assets, net of $465.9 million as of December 28, 2024, compared to $489.1 million as of December 30, 2023, reflecting a decrease of approximately 4.7%[62] - The Company’s total marketing-related intangible assets, net, were $231.4 million as of December 28, 2024, down from $223.1 million as of December 30, 2023[62] - The Company’s customer-related intangible assets, net, were valued at $221.4 million as of December 28, 2024, compared to $251.8 million as of December 30, 2023, indicating a decrease of approximately 12%[62] - The Company amortizes its acquired intangible assets over a weighted average remaining life of 7 years for customer-related intangibles and 25 years for other acquired intangibles[64] - The estimated annual amortization expense related to acquired intangible assets is projected to be approximately $25 million per year from fiscal 2025 through fiscal 2027[65] Legal and Compliance - The Company has not experienced any product recalls that would materially affect its financial position or operations[98] - Management believes that ongoing legal proceedings will not have a material impact on the Company's consolidated financial statements[97] - The Company is currently not involved in any legal proceedings that could materially affect its operations, except for ongoing litigation related to patent infringement[96] - The Company intends to pursue its defenses in ongoing litigation and believes it will prevail on the merits regarding the damages issue[97] - There have been no changes in internal control over financial reporting that materially affected, or are likely to materially affect, the Company's internal control during the first quarter of 2025[155] - The Company’s disclosure controls and procedures were deemed effective as of December 28, 2024[154] - There has been no material change in the Company's exposure to market risk from the previous disclosures[154] Credit Facility - The Credit Facility includes a $50 million sublimit for standby letters of credit and a $75 million sublimit for swing loan borrowings, with no borrowings outstanding as of December 28, 2024[81] - The company maintained compliance with all financial covenants under the Credit Facility as of December 28, 2024[83] - The applicable margin for SOFR-based borrowings was 1.00% as of December 28, 2024, with interest rates based on SOFR and the Base Rate[81]

Group 1 - Central Garden (CENTA) reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of a loss of $0.03 per share, marking an earnings surprise of 800% [1] - The company achieved revenues of $656.44 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.15% and showing an increase from $634.53 million year-over-year [2] - Central Garden has outperformed consensus EPS estimates in all four of the last quarters and has topped revenue estimates twice in the same period [2] Group 2 - The stock has underperformed the market, losing about 5.1% since the beginning of the year compared to the S&P 500's gain of 2.7% [3] - The current consensus EPS estimate for the upcoming quarter is $1.01 on revenues of $904.71 million, and for the current fiscal year, it is $2.22 on revenues of $3.23 billion [7] - The Zacks Industry Rank indicates that the Consumer Products - Discretionary sector is currently in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8]

Financial Performance - Fiscal 2025 Q1 net sales increased by 3% to $656 million compared to $635 million in the prior year[1] - Fiscal 2025 Q1 EPS rose to $0.21 from $0.01 a year ago, reflecting significant improvement in profitability[1] - Gross profit for Q1 was $196 million, with a gross margin improvement of 160 basis points to 29.8% due to productivity gains and moderating inflation[3] - Operating income grew to $28 million from $8 million in the prior year, with an operating margin expansion of 300 basis points to 4.3%[4] - Pet segment net sales increased by 4% to $427 million, while operating income grew to $51 million from $43 million, with an operating margin of 12.0%[5][6] - Garden segment net sales rose by 2% to $229 million, with operating income improving to $2 million from a loss of $9 million, achieving an operating margin of 1.1%[7][8] - Net income for the three months ended December 28, 2024, was $14,181,000, a significant increase from $567,000 in the same period last year[27] - Adjusted EBITDA for the three months ended December 28, 2024, was $55,436,000, compared to $36,978,000 for the same period last year, reflecting a year-over-year increase of approximately 50%[32] Cash and Debt Management - Cash balance at the end of Q1 was $618 million, up from $341 million a year ago, indicating strong liquidity[9] - Total debt remained stable at $1.2 billion, with a gross leverage ratio of 2.9x, down from 3.0x in the prior year[9] - Cash, cash equivalents, and restricted cash at the end of the period totaled $632,669,000, down from $768,403,000 at the beginning of the period[27] - Cash flows from operating activities resulted in a net cash outflow of $68,832,000 for the three months ended December 28, 2024, slightly improved from $69,784,000 in the prior year[27] - The company reported a net cash used in investing activities of $9,418,000, a decrease from $70,475,000 in the same period last year, indicating reduced investment expenditures[27] Shareholder Returns - Central repurchased 1.68 million shares for $52 million during the quarter, with $131 million remaining for future repurchases[10] - The company repurchased common stock totaling $54,022,000 during the three months ended December 28, 2024, compared to $6,775,000 in the prior year[27] Other Financial Metrics - The company maintains its fiscal 2025 non-GAAP EPS outlook of $2.20 or better, despite macroeconomic challenges[12][13] - The company incurred stock-based compensation expenses of $5,510,000 for the three months ended December 28, 2024, compared to $6,021,000 in the prior year[27] - Accounts receivable increased significantly, with a change of $(73,439,000) for the three months ended December 28, 2024, compared to $(32,952,000) in the same period last year[27] - The effect of exchange rate changes resulted in a cash decrease of $(2,038,000) for the three months ended December 28, 2024, contrasting with a cash increase of $790,000 in the same period last year[27] - The company reported a net income attributable to noncontrolling interest of $172,000 for the three months ended December 28, 2024, compared to $137,000 in the prior year[32]

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a negative outlook for these companies based on recent earnings estimate revisions. Company Summaries - Industria de Diseño Textil, S.A. (IDEXY) has seen its current year earnings estimate revised downward by 6.5% over the last 60 days [1] - Central Garden & Pet Company (CENTA) has experienced a 7.5% downward revision in its current year earnings estimate over the past 60 days [3] - Lonza Group AG (LZAGY) has had its current year earnings estimate revised down by 6% in the last 60 days [4]

Financial Performance - Consolidated net sales for fiscal 2024 were $3.2 billion, a decrease of $109.6 million, or 3.3%, compared to fiscal 2023[150] - Operating income declined by $25.3 million, or 12.0%, to $185.4 million in fiscal 2024[152] - Net income for fiscal 2024 was $108.0 million, or $1.62 per diluted share, down from $125.6 million, or $1.88 per diluted share in fiscal 2023[153] - Gross profit decreased by $3.1 million, or 0.3%, to $943.7 million, while gross margin improved by 90 basis points to 29.5%[165] - Organic net sales decreased by 3.9%, with Pet organic sales down 5.9% and Garden organic sales down 1.2%[151] - Net income for fiscal 2024 was $108.0 million, or $1.62 per diluted share, compared to $125.6 million, or $1.88 per diluted share, for fiscal 2023[173] - GAAP net income for the year ended September 28, 2024, was $107,983 thousand, compared to $125,643 thousand for the year ended September 30, 2023, reflecting a decrease of 14.1%[184] - Non-GAAP net income for fiscal 2024 was $142.4 million, or $2.13 per diluted share, compared to $138.5 million, or $2.07 per diluted share, for fiscal 2023[173] Segment Performance - The Pet segment accounted for approximately $1.8 billion in sales, while the Garden segment accounted for approximately $1.4 billion[150] - Pet operating income increased by $5.4 million, or 2.7%, to $203.4 million in fiscal 2024, with an operating margin improvement from 10.5% to 11.1%[167] - Garden operating income decreased by $41.6 million, or 33.7%, to $81.9 million in fiscal 2024, with a non-GAAP operating margin decline to 7.5%[167] - Organic net sales for the Pet Segment decreased by 2.4% in FY 2024, with reported sales of $1,832.8 million compared to $1,877.2 million in FY 2023[186] - The Garden Segment reported a GAAP operating income of $81,893 thousand for FY 2024, down from $123,455 thousand in FY 2023, a decline of 33.7%[186] Expenses and Costs - Selling, general and administrative expenses increased by $22.1 million, or 3.0%, to $758.3 million, representing 23.7% of net sales[166] - The company incurred approximately $7.5 million in one-time costs related to facility closures in the Pet segment[154] - Other income (expense) was an expense of $5.1 million in fiscal 2024, compared to income of $1.5 million in fiscal 2023, mainly due to a $7.5 million impairment for private company investments[171] - Corporate expenses decreased by $10.9 million, primarily due to lower equity compensation and a gain from a litigation settlement[168] Debt and Financing - Debt outstanding was $1,190.0 million as of September 28, 2024, with an average borrowing rate of 4.5%[170] - The company issued $500 million of 4.125% senior notes due October 2030, using proceeds to redeem $300 million of 6.125% senior notes due November 2023 at a redemption price of 101.531%[206] - The company has a $750 million senior secured asset-based revolving credit facility, with net availability of approximately $481 million as of September 28, 2024[208] - Total debt outstanding as of September 28, 2024, was $1,190.0 million, slightly up from $1,188.2 million at September 30, 2023[202] Cash Flow and Investments - Net cash provided by operating activities increased by $13.3 million, from $381.6 million in fiscal 2023 to $394.9 million in fiscal 2024[193] - Net cash used in investing activities increased by $70.6 million, from $34.6 million in fiscal 2023 to $105.2 million in fiscal 2024, primarily due to the acquisition of TDBBS, LLC[194] - Capital expenditures are anticipated to be approximately $70 million over the next 12 months, focusing on plant and equipment upgrades[200] Acquisitions and Growth Strategy - In November 2023, the company acquired TDBBS, LLC for approximately $60 million, enhancing its portfolio in the pet supplies market[159] - The company anticipates continued focus on market expansion and new product development to drive future growth[186] - The company plans to continue evaluating potential acquisition candidates as part of its growth strategy[200] Tax and Interest - Effective income tax rate increased to 23.2% in fiscal 2024 from 22.4% in fiscal 2023, primarily due to a higher blended state income tax rate[172] - Net interest expense decreased by $11.8 million, or 23.7%, to $37.9 million in fiscal 2024 due to increased interest income from higher cash balances[170] Market and Economic Factors - Inflationary pressures impacted gross and operating margins in fiscal 2023, but moderation was noted in fiscal 2024, leading to improved margins[189] - Approximately 66% of the Garden segment's net sales occurred during the second and third fiscal quarters, highlighting the seasonality of the business[191] Compliance and Obligations - The company was in compliance with all financial covenants as of September 28, 2024, under both the 2030 and 2028 Notes[207][212] - Total contractual obligations amount to $1,891.2 million, with $1,200.5 million due thereafter[215] - Estimated interest payments on long-term debt for fiscal years 2025 to 2029 total approximately $282.7 million[215] Impairments and Goodwill - Impairment losses on indefinite-lived intangible assets were recognized at $12.8 million and $11.5 million for fiscal years 2024 and 2023, respectively[224] - The company completed its qualitative assessment of goodwill impairment and determined that fair values of reporting segments were greater than their carrying amounts in fiscal year 2024[221] - The company’s goodwill is associated with its Pet and Garden segments, with no impairment testing required in fiscal 2024[221]

Core Viewpoint - Central Garden (CENTA) reported a quarterly loss of $0.18 per share, which was better than the Zacks Consensus Estimate of a loss of $0.20, indicating a 10% earnings surprise [1] - The company has shown a trend of surpassing consensus EPS estimates over the last four quarters [2] Financial Performance - For the quarter ended September 2024, Central Garden posted revenues of $669.49 million, missing the Zacks Consensus Estimate by 7.51%, and down from $750.15 million year-over-year [2] - The company has exceeded consensus revenue estimates two times in the last four quarters [2] Stock Performance - Central Garden shares have declined approximately 5.8% since the beginning of the year, contrasting with the S&P 500's gain of 25.2% [4] - The current Zacks Rank for Central Garden is 4 (Sell), indicating expectations of underperformance in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $640.69 million, and for the current fiscal year, it is $2.40 on revenues of $3.31 billion [8] - The trend of estimate revisions for Central Garden has been unfavorable ahead of the earnings release [7] Industry Context - The Consumer Products - Discretionary industry, to which Central Garden belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, suggesting potential challenges for stock performance [9]