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Central Garden & Pet (CENT) Q3 Earnings: What's in Store?

Investors do not seem to be enthusiastic ahead of Central Garden & Pet Company’s CENT third-quarter fiscal 2017 earnings release, which is slated to be announced on Aug 2. We observe that the stock has declined roughly 3.5% in the past five days.

Shares of this marketer and producer of quality branded products for the lawn & garden and pet supplies markets have decreased approximately 15% in the past three months, while the industry has declined 8.1%. The broader Consumer Discretionary sector has advanced 2.7% in the same time frame.

As per the latest Earnings Preview, total revenue for the sector are anticipated to increase 8.1%, while earnings are expected to remain flat. Let’s take a closer look as to how Central Garden & Pet is expected to contribute to the sector’s performance.

What to Expect from Central Garden & Pet?

Well the obvious question that comes to mind, will Central Garden & Pet be able to continue with its positive earnings surprise streak in the quarter to be reported. The company has a remarkable history, at least in terms of the bottom line. The company continued with positive earnings surprise streak for the eleventh straight quarter, when it reported second-quarter fiscal 2017 results.

In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 119.1%. The current Zacks Consensus Estimate for the quarter is 50 cents, which is a couple of cents above the year-ago quarter. Analysts polled by Zacks expect revenues of $541.3 million, up over 5% year over year.

Central Garden & Pet Company Price, Consensus and EPS Surprise

Central Garden & Pet Company Price, Consensus and EPS Surprise | Central Garden & Pet Company Quote

Factors Influencing this Quarter

Stiff competition, seasonality of garden business and cautious approach by customers toward discretionary spending remains a concern, as the same may hurt performance. In an effort to deliver sustainable growth, the company is increasing investment. However, costs related to initiatives may hurt net income. Meanwhile, organic growth, value accretive acquisitions such as that of the pet bedding business and Segrest, and divestment of non-strategic assets has been aiding its performance. Moreover, management is revamping both Pet and Garden segments, and intends to possess a balanced approach that encompasses improvement in revenues and profits through operational efficiency as well as cost reduction.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Central Garden & Pet is likely to beat earnings estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Central Garden & Pet has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 50 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks with Favorable Combination

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

Kellogg Company K has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +0.50% and a Zacks Rank #3.

Nordstrom, Inc. JWN has an Earnings ESP of + 3.28% and a Zacks Rank #3.

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