NEW YORK ( TheStreet) -- Central Garden & Pet Company (Nasdaq: CENT) 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, 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, CENT's quick ratio is somewhat strong at 1.42, demonstrating the ability to handle short-term liquidity needs.
- In its most recent trading session, CENT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- 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).
- CENT'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.