$Central Garden & Pet-A (CENTA.US)$🎯 2023.7.14 After holdin...

New data: 2022 Annual Report and 2023 First Half Report

In 2022, revenue increased 1.1%, operating profit increased 2.2%, and net profit remained largely unchanged. Interest expenses account for 22% of operating profit in 2022, and the interest burden is heavy.

In the first two quarters of 2023, revenue fell 4.9%. Operating profit fell 41% due to falling gross margin and increased expenses, while net profit fell sharply by 50% due to leveraging interest expenses.

The balance sheet shows inventory growth of 0.25 billion in 2022, significantly exceeding 0.15 billion in net profit.

Goodwill and other intangible assets increased sharply by 0.59 billion in 2022, and the company's continuous mergers and acquisitions did not stop. In the first analysis, it was not noticed that the growth was due to mergers and acquisitions due to evaluation errors.

Currently, the price-earnings ratio is 13.2, and the price-earnings ratio has been raised to 17.6. If net profit falls by half for the whole year, the corresponding price-earnings ratio will be 26. The valuation is clearly too high, and the position can be closed.