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PetMed (PETS) Beats Earnings, Revenue Estimates in Q4
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PetMed Express, Inc. (PETS - Free Report) , a leading pet pharmacy in the Americas, announced earnings per share (EPS) of 37 cents for the fourth quarter of fiscal 2017, up 37% from the year-ago quarter’s 27 cents. Also, earnings surpassed the Zacks Consensus Estimate by 42.3%.
The year-over-year rise in earnings was driven by an increase in gross margin as a result of shift in sales mix to higher-margin items.
For the full year, EPS reached $1.17, up 14.7% from the year-ago period. The EPS figure also beat the Zacks Consensus Estimate by 9.3%.
Net sales in the reported quarter rose 13.8% year over year to $63.0 million, outpacing the Zacks Consensus Estimate by 12.5%.
According to the company, the upside in sales was a result of increased new orders and reorders during the quarter.
For the full year, net sales were $249.2 million, up 6.18% from the year-ago period. Net sales also surpassed the Zacks Consensus Estimate by 2.8%.
In the reported quarter, reorder sales increased 13.2 % to $52.1 million on a year-over-year basis, while new order sales rose 17% to $10.9 million.
Average order value was approximately $86 in the quarter, compared with $83 in the year-ago quarter. We note that the variation in average order value is mainly driven by shift of sales to higher priced items.
According to the company, the seasonality in its business is mainly because of 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 126,000 new customers, up from 116,000 a year ago. Roughly 83% of all orders were generated from its website (versus 82% in the prior-year quarter).
Gross margin expanded 326 basis points (bps) year over year to 35.1% in the reported quarter. General and administrative expenses were up 8.9% year over year to $5.6 million. Also, advertising expenses rose 17.1% to $4.6 million. This led to a 12.3% increase in adjusted operating expenses (without depreciation expense), which amounted to $9.9 million. Adjusted operating margin in the quarter rose 347 bps to 19.4% from the year-ago quarter.
PetMed exited the fiscal year with cash and cash equivalents of $58.7 million, compared with $47.9 million at the end of the third quarter. The company also declared a quarterly dividend of 20 cents per share, payable to shareholders on record as of May 19, 2017.
Our Take
PetMed exhibited better-than-expected results in the fourth quarter and exited fiscal 2017 on a strong note. We are encouraged to note that the impressive increase in reorder and new order sales in the quarter.
Meanwhile, the company is striving to implement several strategies to revitalize its top line. These include increased focus 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 also working toward upgrading its existing portfolio.
Zacks Rank & Key Picks
PetMed currently has a Zacks Rank #3 (Hold).Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic sports a Zacks Rank #1 (Strong Buy), while Baxter International and Progenics Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 31.6% in the last one year, in comparison to the S&P 500’s 15.0%. The company has a stellar four-quarter average earnings surprise of over 4.16%.
Baxter International rose around 22.4% in the last year, in comparison to the S&P 500. It has a four-quarter average earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 38.8% in the past year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 10.01%.
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PetMed (PETS) Beats Earnings, Revenue Estimates in Q4
PetMed Express, Inc. (PETS - Free Report) , a leading pet pharmacy in the Americas, announced earnings per share (EPS) of 37 cents for the fourth quarter of fiscal 2017, up 37% from the year-ago quarter’s 27 cents. Also, earnings surpassed the Zacks Consensus Estimate by 42.3%.
The year-over-year rise in earnings was driven by an increase in gross margin as a result of shift in sales mix to higher-margin items.
For the full year, EPS reached $1.17, up 14.7% from the year-ago period. The EPS figure also beat the Zacks Consensus Estimate by 9.3%.
PetMed Express: Price, Consensus and EPS Surprise
PetMed Express, Inc. Price, Consensus and EPS Surprise | PetMed Express, Inc. Quote
Net sales in the reported quarter rose 13.8% year over year to $63.0 million, outpacing the Zacks Consensus Estimate by 12.5%.
According to the company, the upside in sales was a result of increased new orders and reorders during the quarter.
For the full year, net sales were $249.2 million, up 6.18% from the year-ago period. Net sales also surpassed the Zacks Consensus Estimate by 2.8%.
In the reported quarter, reorder sales increased 13.2 % to $52.1 million on a year-over-year basis, while new order sales rose 17% to $10.9 million.
Average order value was approximately $86 in the quarter, compared with $83 in the year-ago quarter. We note that the variation in average order value is mainly driven by shift of sales to higher priced items.
According to the company, the seasonality in its business is mainly because of 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 126,000 new customers, up from 116,000 a year ago. Roughly 83% of all orders were generated from its website (versus 82% in the prior-year quarter).
Gross margin expanded 326 basis points (bps) year over year to 35.1% in the reported quarter. General and administrative expenses were up 8.9% year over year to $5.6 million. Also, advertising expenses rose 17.1% to $4.6 million. This led to a 12.3% increase in adjusted operating expenses (without depreciation expense), which amounted to $9.9 million. Adjusted operating margin in the quarter rose 347 bps to 19.4% from the year-ago quarter.
PetMed exited the fiscal year with cash and cash equivalents of $58.7 million, compared with $47.9 million at the end of the third quarter. The company also declared a quarterly dividend of 20 cents per share, payable to shareholders on record as of May 19, 2017.
Our Take
PetMed exhibited better-than-expected results in the fourth quarter and exited fiscal 2017 on a strong note. We are encouraged to note that the impressive increase in reorder and new order sales in the quarter.
Meanwhile, the company is striving to implement several strategies to revitalize its top line. These include increased focus 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 also working toward upgrading its existing portfolio.
Zacks Rank & Key Picks
PetMed currently has a Zacks Rank #3 (Hold).Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic sports a Zacks Rank #1 (Strong Buy), while Baxter International and Progenics Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 31.6% in the last one year, in comparison to the S&P 500’s 15.0%. The company has a stellar four-quarter average earnings surprise of over 4.16%.
Baxter International rose around 22.4% in the last year, in comparison to the S&P 500. It has a four-quarter average earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 38.8% in the past year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 10.01%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>