Investors’ seem to be enthusiastic ahead of Central Garden & Pet Company’s CENT second-quarter fiscal 2017 earnings release, which is slated to be announced on May 3. We observe that the stock has advanced roughly 4% in the past one month. So, what’s driving the stock just before the earnings?
Let’s Delve Deep
Central Garden & Pet has a remarkable history, at least in terms of the bottom line. The company continued with positive earnings surprise streak for the tenth straight quarter, when it reported first-quarter fiscal 2017 results. Studies indicate that on an average, positive earnings surprises drive strong returns in share price for several weeks following the report. Investors are keeping their fingers crossed over the outcome of the results, as they do want to lose this opportunity.
Shares of this marketer and producer of quality branded products for the lawn & garden and pet supplies markets have increased approximately 57.6% in the past six months, while the Zacks categorized Consumer Products-Miscellaneous Discretionary industry has gained 15%. The broader Consumer Discretionary sector, of which both are part of, has advanced 18.1% in the same time frame.
As per the latest Earnings Preview report, total earnings and revenues for the Consumer Discretionary sector are anticipated to increase by 8.1% and 11.3%, respectively. 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’s past performance reveals that it has surpassed the Zacks Consensus Estimate in the trailing four quarters by an average of 120.5%. The current Zacks Consensus Estimate for the quarter is 64 cents. Analysts polled by Zacks expect revenues of $566.4 billion, up over 4% year over year.
Factors Influencing this Quarter
Central Garden & Pet has been revamping both Pet and Garden segments. Moreover, it intends to have a balanced approach that encompasses improvement in revenues and profits through operational efficiency along with cost reduction. Further, it plans to launch several products that appeal to customers, as well as upgrade its customer service. Organic growth and value accretive acquisitions, such as that of the pet bedding business and divestment of non-strategic assets have been helping the company to enhance its portfolio. Additionally, Central Garden & Pet’s gross margin has shown constant improvement.