PetMed Express, Inc. (PETS - Free Report) has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s share price has outperformed the broader industry. The stock has gained 82.8%, against the broader industry’s 49.7% decline. Also, the company has outperformed the S&P 500’s 6.5% gain.
This company has a market cap of $852.81 million. PetMed has delivered an average earnings beat of 23.5% in three of the trailing four quarters.
With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for investors at the moment.
The company’s estimate revision trend for the current year has been positive. In the past 60 days, three analysts revised their estimates upward with no movement in the opposite direction. Resultantly, earnings estimates rose around 17.6% to $1.67.
Per the Zacks Style Score system, PetMed has a Growth Score of A that reflects the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
In this regard, PetMed has a favorable Price/Earnings to Growth (PEG) ratio of 2.46 as compared with the broader industry’s 4.06. With an attractive annualized projected earnings growth rate of 42.5%, PetMed scores higher than the industry’s 23.1%. Let’s find out whether the recent positive trend is a sustainable one.
PetMed has been successfully delivering solid quarterly results. In the second quarter of fiscal 2018, the company topped the Zacks Consensus Estimate for both revenues and earnings. We are upbeat about the stellar increase in reorder and new order sales in the quarter.
We encouragingly note that 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. Moreover, the company is working on resolving issues like limited consumer spending.
We are also optimistic about PetMed’s focus on improving the effectiveness of its campaigns, which have been quite successful in driving sales through e-commerce.
PetMed boasts a comprehensive range of products which is marketed primarily under well-known brands of medication such as Frontline Plus, K9 Advantix, Advantage, Heartgard Plus, Sentinel and Interceptor, among others. We believe improving economic conditions in conjunction with PetMed’s broad portfolio will provide a boost to the top line.
Additionally, the company has a strong cash balance that allows it to carry out share repurchases.
On the flip side, escalating advertising expenses in the quarter have been denting the bottom line. Also, competitive threats raise concern.
Other Key Picks
Other top-ranked medical stocks are Align Technology, Inc. (ALGN - Free Report) , Myriad Genetics, Inc. (MYGN - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) . Notably, Align Technology and Myriad Genetics sport a Zacks Rank #1, while IDEXX Laboratories carries a Zacks Rank #2. You can see the the complete list of today’s Zacks #1 Rank stocks here.
Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 131.7% in a year.
Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 95.9% in a year.
IDEXX Laboratories has a long-term expected earnings growth rate of 20.4%. The stock has rallied 35.3% in a year.
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