PetSmart's Earnings Rebound, But Sales Still So-So - NASDAQ.com

This is not an investment blog... it is just interesting to see the size of the Pet Industry...


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If the U.S. health care system were run likePetSmart ( PETM ), people probably wouldn't be arguing about it.


The company touts Total Lifetime Care for pets. PetSmart has full-service veterinary hospitals in roughly two of every three stores.

PetSmart offers a wide variety of additional services and products: supplies, styling salons, training, PetsHotels with temperature controlled rooms, day camp for dogs, and in-store adoption centers for homeless pets.

While folks nowadays are willing to pay up for pet care, a recession can force consumers to scrimp. PetSmart saw annual earnings slip 2% in fiscal 2009 ended in January and grow only 5% in fiscal 2010.

In fiscal 2011 and '12, earnings jumped 26% and 27%. The Street expects 29% EPS growth this year.

Fundamentals are generally good. The Composite Rating is 98, just shy of a best possible 99. The three-year EPS Stability Factor is 4 and the five-year rating is 8. The scale runs from 0 (calm) to 99 (erratic).

Operating cash flow per share is excellent -- 88% above EPS last fiscal year. Return on equity is 25%, at least a nine-year high. Pretax margin is 7.3%, tying for the company's highest in at least nine years.

The Relative Strength line is just off a 52-week high, and the up-down volume ratio is a mildly bullish 1.1.

PetSmart's Retail-Specialty Group was No. 17 of 197 industry groups, as of Wednesday's IBD. Within the group, PetSmart's ratings trail onlyGNC Holdings ( GNC ) andUlta Beauty ( ULTA ).

The stock's annualized dividend yield is 1%.

Drawbacks have to begin with the market itself, which is struggling. Also, sales growth has been in single digits for the past four fiscal years. Previously, sales growth was 10% to 13% for five years.

Funds have lightened stakes over the past two quarters -- from 817 funds with 59.9 million shares to 787 funds with 55.5 million shares.

PetSmart cleared a 59.18 buy point in a flat base in late April and early May, but volume was weak.

The stock corrected 7% and then gapped up in strong volume off the 50-day line. PetSmart is extended, even from the 5% chase zone set up from the buy point.


The views and opinions expressed hereinare the author's.....

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PetSmart's Earnings Rebound, But Sales Still So-So - NASDAQ.com