Central Garden & Pet Co (CENTA) stock analysis

P/E below its 5-year median

Central Garden & Pet's P/E of 17.0 is below its own 5-year median of 19.5.

P/E below the industry

Central Garden & Pet's P/E of 17.0 is below the Wholesale Trade-non-durable Goods median of 24.6.

EV/EBITDA below its 5-year median

Central Garden & Pet's EV/EBITDA of 9.2 is below its 5-year median of 11.0.

P/B below the industry

Central Garden & Pet's price-to-book of 1.63 is below the Wholesale Trade-non-durable Goods median of 1.66.

Trading below fair value

The share price of $45.58 is below our fair value estimate of $57.44.

Margin of safety over 20%

The price is 20.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -2.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 4.4% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 20.1% over the last twelve months, against a 5-year average of 6.2% a year.

Growing slower than the industry

Revenue grew -1.2% over the last twelve months; the Wholesale Trade-non-durable Goods median is 3.8%.

Guidance raised

Central Garden & Pet raised its fiscal 2026 non-GAAP diluted EPS outlook on Aug 5, 2026.

Gross margin improving

Gross margin was 32.5% over the last twelve months, against 31.1% a year earlier.

Return on equity under 15%

Return on equity was 10.0% over the last twelve months and averaged 10.3% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 9.5%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Central Garden & Pet's return on equity of 10.0% is above the Wholesale Trade-non-durable Goods median of -0.6%.

Earnings grew over 5 years

Net income grew 6.2% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 5.4% over the last twelve months, against a 5-year average of 4.3%.

Net margin above the industry

Central Garden & Pet's net margin of 5.4% is above the Wholesale Trade-non-durable Goods median of -0.1%.

High debt

Debt is 68.3% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 64.5% five years ago to 68.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 32.7% of total debt.

Interest not well covered

Operating income covers interest expense 4.4 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 3.79 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.80; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Central Garden & Pet has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.