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Why Central Garden & Pet Company Shares Popped

By Jeremy Bowman - Feb 5, 2014 at 4:15PM

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Is this meaningful? Or just another movement?

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 Company (CENT -1.67%) were looking like man's best friend today, gaining as much as 12% after reporting first-quarter earnings.

So what: The pet-and-garden-care retailer topped bottom-line estimates, saying its net loss narrowed to $0.26 a share, better than expectations of -$0.31, but sales still fell 1%, to $291 million, worse than estimates of $302.8 million. Due to the seasonal nature of its business, the company generally reports a loss at this time of year. CEO John Ranelli said the first quarter "showed some improvement," as its focus on fundamentals was beginning to yield results. Sales in its Lawn and Garden segment improved, but fell in the Pet category.

Now what: The jump in share price shows how weak expectations are for Central Garden & Pet, as this was not a particularly impressive report. Coming off a year where total per-share profit hit just $0.12, the bottom line appears to be moving in the right direction, though the drop in sales is concerning. Improved efficiency meant that gross profit actually increased in the quarter, but investors should pay close attention to sales in its next report as the first quarter of the year is where the company makes its money. 

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