Central Garden & Pet Company Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Central Garden & Pet Company (NASDAQ:CENT) investors will be delighted, with the company turning in some strong numbers with its latest results. Central Garden & Pet beat earnings, with revenues hitting US$2.7b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 14%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Central Garden & Pet

Following the recent earnings report, the consensus from four analysts covering Central Garden & Pet is for revenues of US$2.62b in 2021, implying a noticeable 2.7% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 8.3% to US$2.05 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.62b and earnings per share (EPS) of US$2.05 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$41.50, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Central Garden & Pet, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$38.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Central Garden & Pet is an easy business to forecast or the the analysts are all using similar assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.7%, a significant reduction from annual growth of 8.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Central Garden & Pet is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Central Garden & Pet's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$41.50, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Central Garden & Pet going out to 2022, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Central Garden & Pet , and understanding it should be part of your investment process.

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