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Central Garden & Pet (CENT) Q2 Earnings: What's in Store?

Central Garden & Pet Company CENT is slated to report second-quarter fiscal 2016 results on May 4, 2016, after the closing bell. The big question facing investors is, whether this producer and marketer of lawn & garden products and pet supplies will be able to deliver a positive earnings surprise in the quarter to be reported.

In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 66.1%. Let’s see how things are shaping up for this announcement.

Likely Earnings Beat in the Cards

Our proven model shows that Central Garden & Pet is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. The Most Accurate estimate stands at 61 cents, while the Zacks Consensus Estimate is pegged at 59 cents for the company. So the ensuing difference, that is, an Earnings ESP of +3.39%, combined with the company’s Zacks Rank #2, makes us reasonably confident of an earnings beat.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing This Quarter

Central Garden & Pet is revamping both its Pet and Garden segments. The company intends to have a balanced approach to improve both its top line and bottom line through operational efficiency and targeted acquisitions. Organic growth, accretive acquisitions such as that of the pet bedding business along with divestment of non-strategic assets should drive the company’s earnings higher.

The company is the leading producer of garden and pet supplies products in the U.S. with a diversified portfolio of brands. This has helped it develop healthy commercial relationships with giant retailers such as Wal-Mart, Home Depot and Lowe’s. We believe that this provides the company significant opportunity to grow.

Stocks Poised to Beat Earnings Estimates

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:

Party City Holdco Inc. PRTY has an Earnings ESP of +25% and a Zacks Rank #2.

Prestige Brands Holdings, Inc. PBH has an Earnings ESP of +4.08% and a Zacks Rank #2.

Time Warner Inc. TWX has an Earnings ESP of +1.55% and a Zacks Rank #3.

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TIME WARNER INC (TWX): Free Stock Analysis Report
 
CENTRAL GARDEN (CENT): Free Stock Analysis Report
 
PRESTIGE BRANDS (PBH): Free Stock Analysis Report
 
PARTY CITY HOCO (PRTY): Free Stock Analysis Report
 
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