NEW YORK (TheStreet) -- Central Garden & Pet Company (Nasdaq:CENTA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, CENTA's quick ratio is somewhat strong at 1.42, demonstrating the ability to handle short-term liquidity needs.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Household Products industry. The net income increased by 0.5% when compared to the same quarter one year prior, going from $31.62 million to $31.77 million.
- CENTRAL GARDEN & PET CO has improved earnings per share by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CENTRAL GARDEN & PET CO reported lower earnings of $0.71 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.71).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CENTA's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
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