Central Garden & Pet Company A

Central Garden & Pet is pursuing further acquisitions after agreeing to acquire a majority interest in TRIXIE Heimtierbedarf GmbH & Co. KG. Management highlighted mergers and acquisitions as a core part of its long-term growth approach and signaled that additional deals are being considered beyond the TRIXIE transaction. The TRIXIE deal pushes Central Garden & Pet deeper into premium and wellness-oriented pet products, aligning with its strategy to shift toward higher-margin consumables and premium offerings. The company stated its balance sheet remains strong after funding the TRIXIE acquisition, leaving room for further M&A. The stock trades at $44.74 and has returned 40.0% year to date and 31.2% over the past year.

Central Garden & Pet reported third-quarter fiscal 2026 results with net sales declining 8% to $882 million, impacted by the exit of the Pet distribution business, while organic net sales rose 2% to $862 million. Non-GAAP diluted EPS was $1.54 compared to $1.56 a year ago, and the company raised its full-year non-GAAP diluted EPS guidance to $2.85 or better, up from $2.70 or better. The Pet segment saw net sales fall 19% to $400 million due to the distribution exit, but organic sales grew 2% to $380 million, and operating margin improved 320 basis points to 19%. The Garden segment delivered a 3% sales increase to $482 million, with operating margin expanding 70 basis points to 18.9%, driven by distribution wins and strong demand in fertilizer, wild bird, and grass seed. Cash provided by operations reached a quarterly record of $327 million, and net leverage fell to an all-time low of 0.5 times, providing significant financial flexibility for future M&A, including the announced acquisition of European pet supplies company TRIXIE.

Nasdaq-listed Central Garden & Pet Company has agreed to acquire a majority stake in German dog and cat treats business Trixie. The stake will be purchased from founder Bonnik Hansen and shareholders Dirk Jessen and Volker Haak, with Jessen and Haak retaining minority holdings. Financial terms were not disclosed. Trixie, based in Tarp, Germany, employs around 600 people and supplies pet stores domestically and overseas. The deal is expected to close in the first half of Central Garden & Pet's 2027 fiscal year, which ends in September.

Central Garden & Pet Company reported that its Cost and Simplicity program expanded second-quarter fiscal 2026 gross margin by 30 basis points to 33.1% and operating margin to 12.6% from 11.2% a year ago. The company relocated its DoMyOwn business to its Covington fulfillment center and is consolidating Top Dog Best Bully Sticks manufacturing into its New Jersey platform to improve efficiency. It also entered a joint venture with Phillips Pet Food & Supplies while retaining a 20% ownership stake to strengthen its distribution network. Management reaffirmed fiscal 2026 adjusted earnings guidance of $2.70 per share or better, citing ongoing margin discipline despite inflation and tariffs.

Central Garden & Pet received a Zacks Rank upgrade to #1, reflecting a 2.6% upward revision in its full-year earnings consensus over the past quarter. The stock has returned 32.8% year-to-date, significantly outperforming the Consumer Discretionary sector's average decline of 8.8%. The upgrade signals increased analyst confidence in the company's pet and garden product categories, though rising expectations also raise the bar for future quarterly results. Central Garden & Pet remains heavily tied to U.S. pet and lawn and garden spending, which could pose a risk if those categories slow.

Central Garden & Pet has returned 32.8% so far this year, significantly outperforming the Consumer Discretionary sector's average decline of 8.8%. The company holds a Zacks Rank of 1, indicating Strong Buy, and its full-year earnings consensus estimate has risen 2.6% over the past quarter. Within the sector, the Consumer Products - Discretionary industry, which includes 28 companies, has gained 7.1% year-to-date, while the Schools industry, home to Legacy Education Inc., has moved up 4.1%. Legacy Education Inc. itself has returned 16.2% this year and carries a Zacks Rank of 2, or Buy, with its current-year EPS estimate increasing 1.9% in the last three months.

Central Garden & Pet currently offers a more compelling opportunity than Chewy, according to a Zacks Investment Research analysis. Chewy, with a market capitalization of roughly $8 billion, saw its shares lose 32.8% over the past three months and carries a Zacks Rank #4 (Sell), while Central Garden & Pet, valued at approximately $3 billion, gained 15.2% and holds a Zacks Rank #1 (Strong Buy). Central Garden & Pet's diversified portfolio, operational improvements, and focus on higher-margin categories contributed to a pet segment operating margin expansion of 290 basis points to 16.3% in its latest quarter, and the company reaffirmed fiscal 2026 adjusted EPS guidance of $2.70 or better. Chewy continues to gain market share through its Autoship subscription model and healthcare expansion, but lowered its fiscal 2026 sales outlook to $13.40-$13.55 billion amid a cautious consumer backdrop. The Zacks Consensus Estimate for Central Garden & Pet's current fiscal-year EPS has increased 7 cents to $2.89 over the past 60 days, while Chewy's estimate decreased 10 cents to $1.53.