NEW YORK ( TheStreet) -- Central Garden & Pet Company (Nasdaq: CENTA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $104.72 million or 3.78% when compared to the same quarter last year. Despite an increase in cash flow, CENTRAL GARDEN & PET CO's average is still marginally south of the industry average growth rate of 12.27%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Products industry. The net income has significantly decreased by 34.0% when compared to the same quarter one year ago, falling from $25.87 million to $17.08 million.
- The gross profit margin for CENTRAL GARDEN & PET CO is currently lower than what is desirable, coming in at 32.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.50% trails that of the industry average.