CENTA - Central Garden & Pet Company: Market Leader In An Attractive Industry

2024-04-11 04:55:21 ET

Summary

• CENT’s revenue and EBITDA have grown exceptionally well, with a CAGR of 8% and 13%. The company has gained market share quickly and consolidated its position as a leading player.
• CENT has a bulletproof business model, with a range of brands, strong market share, leading distributor relationships, and a number of tailwinds driving healthy growth in the coming years.
• CENT’s recent performance reflects the macro environment, with muted demand and limited interest from retailers to lift stock levels. We expect this to weigh on CENT.
• CENT’s performance relative to its peers leaves much to be desired, as its margins are materially below average. Although its commercial position is attractive, this limits the long-term scope for outperformance.
• CENT appears undervalued in our view, although not materially so. We do not consider this sufficient given the near-term headwinds expected.

Introduction and thesis

Central Garden & Pet Company ( CENT ) is a leading innovator, producer, and distributor of branded and private label products for the lawn and garden as well as pet supplies markets. The company operates through two segments: Pet and Garden....

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