Central Garden & Pet Company: The 10% FCF Yield PE Arbitrage Nobody's Pricing In

Central Garden & Pet offers 45% upside to a $65 base-case target, driven by discounted valuation and strategic expansion. The TRIXIE acquisition establishes CENT as a global leader, unlocking European growth and M&A opportunities at attractive multiples. Portfolio optimization and a shift to branded products have expanded margins to ~13%, with 10.3% FCF yield and robust buybacks. CENT trades at 10.6x EV/EBITDA, well below recent PE deal multiples (12–17x), highlighting clear arbitrage potential.

Central Garden & Pet (CENT) is the second-largest pet supplies company in the United States and a market-leading garden products platform with over 60 brands (including Nylabone, Kaytee, Aqueon, Pennington, Ferry-Morse, and Sevin). The following points drove me to the stock: