Petco Health and Wellness (WOOF Quick QuoteWOOF - Free Report) , the pet retail superstore with 1,500 locations across the US, Mexico and Puerto Rico has struggled in its competition against e-commerce in recent years, ceding valuable market share.

A slowdown in growth following the Covid recovery boom and high expenditures have also played a role in pushing the stock lower and shifting analysts to the bearish side. Petco Health and Wellness currently has a Zacks Rank #5 (Strong Sell) rating and should thus be avoided until a material fundamental change.

Falling Earnings Estimates

Earnings estimates have plummeted in the last two months, giving Petco Health and Wellness Co. the lowest Zacks Rank. Current quarter earnings estimates have been lowered by (-86%) and are projected to fall (-91%) YoY to $0.02 per share. Additionally, FY24 estimates have fallen by (-71%) and are forecast to decline (89%) YoY to $0.08 per share.

Additionally, sales for this year are expected to grow 3% YoY to $6.2 billion and just 0.13% next year.

Image Source: Zacks Investment Research

Bottom Line

WOOF stock has been selling off since its IPO and is down a cumulative (-90%) since then. Clearly something is going wrong at the company. That being said, one day there will likely be a bottom, as the Petco brand is extremely well-known. Because of that, I don’t think this is a stock that investors should sell short, but rather be avoided until things markedly improve.

Image Source: TradingView