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PetMed (PETS) Earnings Miss, Revenues Top Estimates in Q2
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PetMed Express, Inc. (PETS - Free Report) , a leading pet pharmacy in the Americas, announced earnings per share (EPS) of 24 cents in the second quarter of fiscal 2017, up 9.1% from the year-ago quarter. However, earnings missed the Zacks Consensus Estimate by a couple of cents.
Net sales in the reported quarter improved 7.2% year over year to $60.8 million, beating the Zacks Consensus Estimate of $58 million. According to the company, the upside in sales was a result of increased new orders and reorders.
In the reported quarter, reorder sales increased 7.4% year over year to $50.1 million, while new order sales rose 6.3% to $10.7 million.
Average order was approximately $82 for the quarter, compared with $80 in the year-ago quarter.We have noted that the variation in average order value mainly stems from a change in product mix to higher priced items and increased doses.
According to the company, the seasonality in its business is mainly because of o the proportion of flea, tick and heartworm medications in the product mix.Spring and summer are considered peak seasons while fall and winter represent off-seasons.
During the quarter under review, PetMed acquired 131,000 new customers, up from 127,000 a year ago. Roughly 82% of all orders were generated from its website (versus 81% in the prior-year quarter).
Gross margin contracted 363 basis points (bps)year over year to 29.7% in the reported quarter.General and administrative expenses were up 6.6% year over year to $5.7 million,while there was a 29.9% decline in advertising expenses to $4.3 million.This led to a 12.9% reduction in adjusted operating expenses (without depreciation expense), which amounted to $10.1 million.Accordingly, adjusted operating margin in the quarter rose 23 bps to 13.05%.
PetMed exited the second quarter of fiscal 2017 with cash and cash equivalents of $51.9 millioncompared with $44.3 million in fiscal 2016. The company also declared a quarterly dividend of 19 cents per share, payable to shareholders on record as of Nov 18, 2016.
Our Take
PetMed exhibited a better-than-expected revenue performance in the second quarter of fiscal 2017, while earnings lagged the Zacks Consensus Estimate. We note significant increase in new order sales and re-order sales in the quarter.
We are also apprehensive about the pressure on margins despite the company’s cost-reduction initiatives. Furthermore, the drop in advertising revenues raises concerns.
The company is striving to implement several strategies to revitalize its top line. These include focusing on advertising efficiency to boost new order sales and shifting sales to higher margin items, while also expanding product offerings.
PetMed currently offers a wide range of products catering to dogs, cats and horses, and is working persistently on upgrading its existing portfolio.
Zacks Rank & Key Picks
PetMed currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical product sector include GW Pharmaceuticals plc , Quidel Corp. (QDEL - Free Report) and NuVasive, Inc. . GW Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), while Quidel and NuVasive carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 72.6% year to date compared to the S&P 500’s 5.25% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Quidel rallied 26% in the past one year, higher than the S&P 500’s 3.87%. Over the next five years, the stock is estimated to record earnings growth rate of 20%, higher than the industry average of 14.8%.
NuVasive’s shares soared 44% over the past one year, compared to the S&P 500’s 6.2%. Over the next five years, the stock is expected to see 16.7% earnings growth, compared to the industry average of 14.8%. It has a trailing four-quarter average earnings surprise of 19%.
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PetMed (PETS) Earnings Miss, Revenues Top Estimates in Q2
PetMed Express, Inc. (PETS - Free Report) , a leading pet pharmacy in the Americas, announced earnings per share (EPS) of 24 cents in the second quarter of fiscal 2017, up 9.1% from the year-ago quarter. However, earnings missed the Zacks Consensus Estimate by a couple of cents.
Net sales in the reported quarter improved 7.2% year over year to $60.8 million, beating the Zacks Consensus Estimate of $58 million. According to the company, the upside in sales was a result of increased new orders and reorders.
In the reported quarter, reorder sales increased 7.4% year over year to $50.1 million, while new order sales rose 6.3% to $10.7 million.
PETMED EXPRESS Price, Consensus and EPS Surprise
PETMED EXPRESS Price, Consensus and EPS Surprise | PETMED EXPRESS Quote
Average order was approximately $82 for the quarter, compared with $80 in the year-ago quarter.We have noted that the variation in average order value mainly stems from a change in product mix to higher priced items and increased doses.
According to the company, the seasonality in its business is mainly because of o the proportion of flea, tick and heartworm medications in the product mix.Spring and summer are considered peak seasons while fall and winter represent off-seasons.
During the quarter under review, PetMed acquired 131,000 new customers, up from 127,000 a year ago. Roughly 82% of all orders were generated from its website (versus 81% in the prior-year quarter).
Gross margin contracted 363 basis points (bps)year over year to 29.7% in the reported quarter.General and administrative expenses were up 6.6% year over year to $5.7 million,while there was a 29.9% decline in advertising expenses to $4.3 million.This led to a 12.9% reduction in adjusted operating expenses (without depreciation expense), which amounted to $10.1 million.Accordingly, adjusted operating margin in the quarter rose 23 bps to 13.05%.
PetMed exited the second quarter of fiscal 2017 with cash and cash equivalents of $51.9 millioncompared with $44.3 million in fiscal 2016. The company also declared a quarterly dividend of 19 cents per share, payable to shareholders on record as of Nov 18, 2016.
Our Take
PetMed exhibited a better-than-expected revenue performance in the second quarter of fiscal 2017, while earnings lagged the Zacks Consensus Estimate. We note significant increase in new order sales and re-order sales in the quarter.
We are also apprehensive about the pressure on margins despite the company’s cost-reduction initiatives. Furthermore, the drop in advertising revenues raises concerns.
The company is striving to implement several strategies to revitalize its top line. These include focusing on advertising efficiency to boost new order sales and shifting sales to higher margin items, while also expanding product offerings.
PetMed currently offers a wide range of products catering to dogs, cats and horses, and is working persistently on upgrading its existing portfolio.
Zacks Rank & Key Picks
PetMed currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical product sector include GW Pharmaceuticals plc , Quidel Corp. (QDEL - Free Report) and NuVasive, Inc. . GW Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), while Quidel and NuVasive carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 72.6% year to date compared to the S&P 500’s 5.25% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Quidel rallied 26% in the past one year, higher than the S&P 500’s 3.87%. Over the next five years, the stock is estimated to record earnings growth rate of 20%, higher than the industry average of 14.8%.
NuVasive’s shares soared 44% over the past one year, compared to the S&P 500’s 6.2%. Over the next five years, the stock is expected to see 16.7% earnings growth, compared to the industry average of 14.8%. It has a trailing four-quarter average earnings surprise of 19%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>