Central Garden & Pet has been treading water for the past six months, recording a small loss of 1.4% while holding steady at $37.99. The stock also fell short of the S&P 500’s 9.3% gain during that period.

Is there a buying opportunity in Central Garden & Pet, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

We don't have much confidence in Central Garden & Pet. Here are three reasons why there are better opportunities than CENT and a stock we'd rather own.

Why Is Central Garden & Pet Not Exciting?

Enhancing the lives of both pets and homeowners, Central Garden & Pet (NASDAQ: CENT) is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.

1. Core Business Falling Behind as Demand Declines

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.

Central Garden & Pet’s demand has been falling over the last eight quarters, and on average, its organic sales have declined by 2% year on year.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Central Garden & Pet’s revenue to rise by 4.3%. Although this projection implies its newer products will spur better top-line performance, it is still below the sector average.

3. EPS Trending Down

We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Central Garden & Pet, its EPS declined by more than its revenue over the last three years, dropping 3% annually. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Final Judgment

Central Garden & Pet isn’t a terrible business, but it isn’t one of our picks. With its shares underperforming the market lately, the stock trades at 14.9× forward price-to-earnings (or $37.99 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere. We’d recommend looking at a dominant Aerospace business that has perfected its M&A strategy.

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