Spectrum Brands (NYSE:SPB) vs. Central Garden & Pet (NASDAQ:CENT) Critical Review

Central Garden & Pet (NASDAQ:CENT) and Spectrum Brands (NYSE:SPB) are both mid-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Profitability

This table compares Central Garden & Pet and Spectrum Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Central Garden & Pet	5.39%	11.13%	4.93%
Spectrum Brands	2.76%	10.06%	5.49%

Risk and Volatility

Central Garden & Pet has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Spectrum Brands has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Central Garden & Pet and Spectrum Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Central Garden & Pet	0	2	1	1	2.75
Spectrum Brands	0	4	4	0	2.50

Central Garden & Pet presently has a consensus target price of $54.00, indicating a potential upside of 14.02%. Spectrum Brands has a consensus target price of $97.86, indicating a potential upside of 10.67%. Given Central Garden & Pet’s stronger consensus rating and higher probable upside, equities analysts plainly believe Central Garden & Pet is more favorable than Spectrum Brands.

Valuation and Earnings

This table compares Central Garden & Pet and Spectrum Brands”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Central Garden & Pet	$3.08 billion	0.96	$162.84 million	$2.68	17.67
Spectrum Brands	$2.81 billion	0.72	$99.70 million	$3.28	26.96

Central Garden & Pet has higher revenue and earnings than Spectrum Brands. Central Garden & Pet is trading at a lower price-to-earnings ratio than Spectrum Brands, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

16.1% of Central Garden & Pet shares are held by institutional investors. 8.2% of Central Garden & Pet shares are held by insiders. Comparatively, 4.5% of Spectrum Brands shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Central Garden & Pet beats Spectrum Brands on 11 of the 15 factors compared between the two stocks.

About Central Garden & Pet

Central Garden & Pet Company develops, manufactures and distributes products for the pet and lawn-and-garden markets. Founded in 1980, the company is headquartered in Walnut Creek, California, and serves customers primarily in North America. Its Pet segment offers products for dogs, cats, birds, fish, small animals and other pets. Its brands include Aqueon, Kaytee, Nylabone and K&H Pet Products, with offerings such as food, treats, toys, habitats and aquarium supplies. The Garden segment sells products for lawn care, gardening and outdoor living, including grass seed, fertilizer, pest-control products, live plants and garden accessories.

About Spectrum Brands

Spectrum Brands Holdings, Inc. is a global consumer products company that develops, manufactures and markets products for homes, pets and gardens. Its businesses serve consumers through a portfolio of established brands and retail, e-commerce and other distribution channels. The company’s Home and Personal Care products include small kitchen appliances, personal care devices and home appliances sold under brands such as Remington, Russell Hobbs, George Foreman and Black+Decker, under license. Its Global Pet Care business offers products for aquatic pets, companion animals and pet health, including brands such as Tetra, DreamBone and Nature’s Miracle.