What happened
Central Garden & Pet Company (CENT -0.01%) (CENTA 0.14%) stock took a tumble on Wednesday, and is down 19.2% as of 12:40 p.m. EST, after the maker of branded and private-label lawn and garden and pet supplies reported a big earnings miss in its fiscal Q4 2019 earnings report, released last night.
Image source: Getty Images.
So what
Central Garden & Pet earned just $0.04 per diluted share in fiscal Q4, down from $0.19 per share a year ago -- a 79% drop. Analysts had expected Central Garden's earnings would decline; consensus estimates called for the company to earn $0.17 per share. The much steeper-than-expected decline in profit, however, appeared to take investors by surprise -- especially given that sales in the quarter actually grew by a respectable 8%.
A sharp rise in input costs appears to be primarily to blame for the decline. Cost of goods sold spiked more than 10% in the quarter, outpacing sales gains.
Now what
And don't expect things to get much better very soon, because Central Garden & Pet expects "continuing challenges in the animal health businesses" and "higher corporate expenses" to weigh on its results in the year ahead.
Issuing new guidance for fiscal 2020, management warned that "diluted EPS for fiscal 2020 will be at or modestly above its fiscal 2019 results." And in Q1 in particular, the company expects to lose between $0.10 and $0.15 per share. For any investors hoping for a return to growth in 2020, this news has to come as a disappointment -- and they're making their displeasure known by selling Central Garden & Pet stock.
