Pet company Central Garden & Pet (NASDAQGS:CENT) reported results ahead of analysts' expectations in Q1 CY2024, with revenue flat year on year at $900.1 million. It made a non-GAAP profit of $0.99 per share, improving from its profit of $0.90 per share in the same quarter last year.

Is now the time to buy Central Garden & Pet? Find out by accessing our full research report, it's free.

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

Household Products

Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.

Sales Growth

Central Garden & Pet is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.

As you can see below, the company's annualized revenue growth rate of 2.9% over the last three years was weak for a consumer staples business.

This quarter, Central Garden & Pet's revenue fell 1% year on year to $900.1 million but beat Wall Street's estimates by 1.4%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.

Central Garden & Pet has shown decent cash profitability, giving it some flexibility to reinvest. The company's free cash flow margin averaged 6.3% over the last two years, slightly better than the broader consumer staples sector.

Furthermore, Central Garden & Pet's margin expanded by 8.1 percentage points during that time, giving it multiple ways to win.

Central Garden & Pet burned through $33.87 million of cash in Q1, equivalent to a negative 3.8% margin. The company's cash burn increased by 26.8% year on year.

Key Takeaways from Central Garden & Pet's Q1 Results

We were impressed by how significantly Central Garden & Pet blew past analysts' organic revenue growth and EPS expectations this quarter. On the other hand, its full-year earnings forecast was underwhelming. Overall, we think this was decent quarter. The stock is up 1.1% after reporting and currently trades at $42.19 per share.

Central Garden & Pet may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.