Why Central Garden & Pet's Shares Dropped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Central Garden & Pet (Nasdaq: CENT  ) were wilting under the harsh rays of dismayed investors today, falling 12% in intraday trading after the company announced fiscal second-quarter earnings.

So what: For the quarter that ended in March, Central Garden & Pet dropped the ball. Management said as much in its earnings press release today. According to CEO Bill Brown, "Even with strong demand from consumers for our products, our sales and earnings were affected this quarter by short-term execution issues."

Those execution issues were due to the company's "transformational" effort -- an initiative that's aimed at turning the Central Garden group of companies into a more seamless, integrated company.

Nevertheless, investors were having none of it today. Revenue dropped 4% year over year to $467 million, while earnings per share slipped 17% to $0.45. The latter was well short of Wall Street analysts' average estimate of $0.54.

Now what: Here's the silver lining: As Brown noted, demand has been strong. That's a good thing. But the company has to get its act together in order to capitalize on that demand. From management's point of view, the company transformation will be worth the short-term hit, because -- as president Gus Halas put it -- it will "position the Company for success in the coming years."

Investors are upset today, but if management can deliver on that promise, better times may be ahead.

Want to keep up to date on Central Garden & Pet? Add it to your watchlist.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1878754, ~/Articles/ArticleHandler.aspx, 10/25/2016 5:01:06 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:00 PM
CENT $24.17 Down -0.78 -3.13%
Central Garden and… CAPS Rating: No stars