Central Garden Upped to Neutral - Analyst Blog
April 24 2013 - 1:50PM
Zacks
On Apr 16, we upgraded consumer goods company, Central
Garden & Pet Company (CENT) to Neutral based on
improved prospects owing to its strategic initiatives. Central
Garden, which focuses on lawn & garden and pet products,
carries a Zacks Rank #3 (Hold).
Why the Upgrade?
Central Garden & Pet’s primary focus is on streamlining its
cost structure, increasing operating efficiencies in order to
improve its margins and concentrating on revenue growth through
marketing and brand-building initiatives. The company’s long-term
target is to attain growth of at least 10% in the top line, and
achieve operating margins in the range of 10% – 15%. The company
also targets $40 million in cumulative cost savings as it exits
fiscal 2013.
Alongside, being the leading producer of garden and pet supplies
products in the U.S. and with a diversified portfolio of brands,
Central Garden & Pet developed a healthy commercial
relationship with giant retailers, such as Wal-Mart Stores
Inc. (WMT) and The Home Depot, Inc. (HD).
This provides a significant upside potential for the company.
However, the discretionary spending environment continues to
remain sluggish amid high unemployment levels and tight credit
markets. This is a looming concern for the company as a significant
portion of its product portfolio consists of premium offerings.
Other Stock to Consider
Besides Central Garden, the other stock in the consumer goods
sector worth considering includes Jarden Corp.
(JAH), which holds a Zacks Rank #1 (Strong Buy) and is expected to
continue with its upbeat performance.
CENTRAL GARDEN (CENT): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
JARDEN CORP (JAH): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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