Petmed Express (PETS - Analyst Report) is Americas largest pet pharmacy and todays Bull of the Day after it recently became a Zacks Rank #1 (Strong Buy). The stock is trading at 52 week highs and looks to continue its momentum after a solid earnings beat last month.
Petmed is based in Pompano Beach, FL and has 178 fulltime employees. The company has a market cap of $380 Million with a Forward PE of 18. The stock pays a dividend of 4.07% and sports Zacks Styles Scores of “B” in Value and “A” in Momentum.
The company markets prescription and non-prescription pet medications, health products, and supplies for dogs and cats to retail customers. It provides non-prescription medications and supplies, such as flea and tick control products, bone and joint care products, vitamins, treats, nutritional supplements, hygiene products, and supplies; and prescription medications, including heartworm preventatives, flea and tick preventatives, arthritis, thyroid, diabetes, pain medications, antibiotics, and other specialty medications, as well as generic substitutes. The company also sells food, beds, crates, stairs, strollers, and other pet supplies through its Website.
The stock has significantly outperformed the S&P 500 over the last two years, seeing a 52% gain while the S&P saw 9%. The momentum is on Petmed’s side as the stock looks poised to break the $20 level it breached after last quarter’s earnings announcement.
Earnings and Estimates
Petmed reported earnings on May 9th and saw Q4 earnings of $0.27versus the $0.24 expected, with revenue coming in at $55.4 Million verse the $49.8 Million. The company also raised the dividend 5.6% to $0.19 a share. In addition, average order sizes came in at $83, up from $81 last year at this time.
Investors applauded the quarter buying the stock up from $18 to a 52 week high of $20.61, a move of almost 15%. The stock has pullback since and is looking to fill that earnings gap, giving investors a good entry spot heading into next quarters earnings.
Over the last month, estimates have been revised 3.4% higher for the current quarter. More impressive is the current year estimates, which have jumped 12% over the last month. These numbers come from two different analyst that are both in agreement on earnings potential.
PETS has a solid track record of beating on EPS and will go for its six straight beat on July 18th. Looking at the chart below, investors have failed to reward the stock for EPS beats until recently. This momentum should continue if we see another EPS surprise to the upside again in July.
Even if the company misses, historically we see investors shrug off the quarter and focus more on long term potential. Giving the stocks hefty dividend, investors will be paid to wait while the company continues to slowly grow its business.
In a world of low yielding vehicles, investors will pay up for higher paying dividend stocks. Petmed Express has that dividend and along with steady earnings and revenue growth. Technically the stock looks healthy with a long term trendline supporting the stock since 2012.
Any pullbacks should be bought as the stock looks to continue to take out 52 weeks highs as we head into the next earnings report.
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