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Watching the Super Bowl grass grow
Can investors score with shares of the company that produced the playing surface for the big game?
February 6, 2005: 10:30 PM EST
By Paul R. La Monica, CNN/Money senior writer
Central Garden & Pet's stock performance has been
Central Garden & Pet's stock performance has been "Super" for the past two years.
SportsBiz SportsBiz Column archive Sports Illustrated email Chris Isidore

NEW YORK (CNN/Money) Advertisers doled out $2.4 million to hawk their wares for a mere 30 seconds during the Super Bowl.

But one company had its product in prime view for the entire game. And it didn't have to pay Fox a dime. In fact, the company was getting paid by the National Football League.

Central Garden & Pet (Research) is the company that developed the grass seed used to produce the playing field for Super Bowl XXXIX in Jacksonville on Sunday.

This is the third year in a row that the NFL is using grass from the company's Pennington Seed subsidiary for the Super Bowl. Not a bad gig.

And even though you're unlikely to hear Fox announcer Joe Buck lauding the company's lush green Princess 77 Bermudagrass by name during the telecast Sunday, the company hopes that the exposure will translate into even more high profile contracts.

"Of course, it makes a difference from a brand awareness perspective," said Paul Warburg, vice president of investor relations for Central Garden & Pet.

Warburg wouldn't comment on whether or not the company was secretly rooting for the New York Jets, whose quarterback is Chad Pennington, to make the Super Bowl. But you would think that would have been marketing manna from heaven.

The "garden" part of the company's business accounted for about 55 percent of total sales in its latest fiscal year, which ended in September. Warburg added that Central Garden & Pet is hoping to generate more sales from the more lucrative professional market, as opposed to the average homeowner with a small lawn.

Grass grown from Pennington Seed was used in last year's U.S. Open Golf Tournament as well, Warburg said.

A "Super" boost for the stock?

Douglas Lane, an analyst with Avondale Partners, agrees that events like the Super Bowl will help the company, which faces competition from larger rivals like The Scotts Co (Research)., the maker of Turf Builder, Miracle-Gro and Ortho, and United Industries, which is in the process of being acquired by battery company Rayovac (Research).

"Pennington is big business for them so the Super Bowl does give them some credibility in the professional market. Professionals are more particular than the home gardener and are willing to pay for higher priced seeds," said Lane.

So what about the company's stock? If investors like how the field looks at Alltel Stadium on Sunday, should they buy shares?

Well, the company looks like a decent value. Shares trade at 17 times estimates for fiscal 2005 and earnings are expected to increase 24 percent this year and 15 percent annually for the next five years.

Lane likes the stock, noting that the company's pet-supplies business is growing rapidly and has higher profit margins than the garden segment. In addition, he said that the company should have fairly easy comparisons in the garden business during this summer since last summer was weak due to cool and wet weather across much of the country. Lane doesn't own the stock and his firm has no banking relationship with the company either.

And for what it's worth, shares have performed well in the past two years, gaining 51 percent in 2003 and adding on another 50 percent last year. So maybe there is a Super Bowl bump.

But as any hard core football fan knows, next year could be a problem. Super Bowl XL (don't you just love Roman numerals?) will be played at Detroit's Ford Field. That's an indoor stadium -- which means artificial turf.

Still, Warburg is confident that Central Garden & Pet will have more opportunities to showcase its fields of green in coming years. Its next chance will be when Super Bowl XLI is played in Miami in 2007.

"I imagine that when the Super Bowl goes back to a natural playing surface, we'll be with them," Warburg said.

And who knows? Maybe the Jets and Chad Pennington will be there too. Then again...probably not.  Top of page


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