+ Watch PETM
on My Watchlist
The Company is a provider of products, services and solutions for the lifetime needs of pets.
PETM has an absurd 40% market share in the pet store business. PETCO has 20%. Together they DOMINATE the industry essentially as a duopoly. People aren't going to stop buying pets or pet supplies any time soon.Go look at the consistently high ROIC and ROE. PETM ranks higher than 95% of companies in those important metrics.Per share free cash flow went from $0.50 to $4.69 over the past decade, and it will continue to grow in the future.The share count is down from 150m in 2005 to 106m today.Reverse DCF shows PETM to be priced for 3% growth, which seems completely irrational to me. Estimates for the next 5 years are 14%. I'll go extra conservative an cut that estimate in half and say 7%, which would result in a fair value around $96, significantly higher than today's $72.70 price. So I'd conservatively value PETM around $96-$110, but it could be worth significantly more if those 5 year growth estimates are anywhere near correct. Today's FCF/EV yield is 6.4%, which I find very attractive for a dominant, growing business.Mouthwatering economics + dominant franchise + attractive price = very high probability of a favorable long-term result.
Good ROIC, growing cash, no debt, higher revenues, busting in shares. There is a lot to like in Petsmarthttp://financials.morningstar.com/ratios/r.html?t=PETM®ion=USA&culture=en-USThanks to tom e. for flagging this one.
Changing My Caps to Reflect my investing strategy. I start with a simple screener trying to find undervalued dividend paying stocks. Then because I want to invest in things I understand I eliminate any businesses I have not heard of or in areas I lack knowledge ( Financials, Precious Metals). After that I check the Caps Rating and it gets a thumbs up if it is rated 4 stars or higher. Very few 3 star companies will get a thumbs up but occasionally i will go out on a limb with one.
People love there pets and are willing to spend on them. Wait for a pull back to its 50 day moving average and buy.
Retail specialty market leader that has spurred growth with same store sales versus expansion. Ongoing product mix diversity and entrance into new markets should continue impressive revenue and income streak.
Solid and steady. I see so many people out there with dogs and poop bags. With the economy coming back and more discretionary income it should do well.
Buying dog food over the internet is not convenient. Now that people aren't losing their houses as often, PETM is more recession-resistant (people will cut back on a lot before they neglect the family dog).Valuation isn't too high (not quite a value stock), dividend growth is good, growth rate is good, largest pet retailer.If it goes lower, I will buy more. Long-term play.
PETM reported earnings yesterday - March 6, 2013. Here's what S&P had to say just one day prior to earnings:March 5, 2013 04:46 am ET ... S&P REITERATES BUY RECOMMENDATION ON SHARES OF PETSMART (PETM 65.60****): Ahead of earnings expected March 6, we are keeping our Jan-Q EPS estimate of $1.23 and maintaining our DCF-based target price of $82. Despite recent stellar results, we think the shares sold off over the past month on increasing fears related to competition from Wag.com (a subsidiary of Amazon.com), and the impact that increased spending on its own e-commerce site will have on profitability. While we don't discount these concerns, PETM has grown rapidly in recent years despite intensifying competition, and we continue to favor the company's recession-resistant characteristics.- - Michael Souers (S&P analyst)
PETM will benefit from their continued excellent same store sales and services as well as from a retiring Boomer who has money to spend on their pet(s) as their children have now grown
Much lower on very high volume.
People are spending crazy money on pets and PETM is in the sweet spot
I placed PETM on my caps on 11/20/08 at $15.78, excluding dividends. I wanted to note it. I will be keeping them on my CAPS because believe they will steadily beat the S&P500 for many years to come. I wrote my page 12 post on PETM on 12/10/2011. The price of the stock was $49.24 and the PE ratio was 20.43. Today the price is $69.69 or 41.5% higher, but the PE ratio is only 21.71 or about 6.3% higher. The price would have to fall to $65.58 to match the PE on 12/10/2011. So although the price is moving up very well, the PE isn’t, so the value range is creating a significantly higher price range which is always good for investors.The Company has improved its balance sheet even though they now pay a $0.66 per share dividend a year and repurchased $453 million worth of their common stock. TTM cash flow was $480.93 or $4.40 per share up from $458.6 million or $4.06 per share last year. This gives them a cash flow yield of 6.3%. In 2007, melamine-contaminated dog and cat food from China caused the death of many pets. That event accelerated the trend toward the purchase of premium and natural pet foods. PetSmart is doing a great job of exploiting that trend. They also have about 43.1% of the Pet industry market. Petco has about 20.7% of the market. The big potential growth driver for PetSmart is the decline of the over 13,000 pet shops that are independently owned in the U.S. The number of small pet shops is growing smaller each year. PetSmart buying power is much larger than those companies which give them a big advantage. I believe PetSmart will benefit from the contraction of the number of small pet shops for many years to come.I don’t think PetSmart will grow rapidly, but they should give investors a steady return and steady growth. They generate huge streams of cash flow on existing stores, so they can pay a larger dividend and/or keep buying back shares. I believe, they will easily beat the S&P500 over the next ten years.Back on October 4, 2011, the Dow bottomed at 10,362.26. During that period PETM PE dropped to 16.8. For the stock to trade at a PE of 16.8 today, the stock would have to drop to $53.93. Considering the fear levels prevalent when the Dow dropped last year, I would think the PE of 16.8 would be a really good bargain target price. However, there is no guarantee the stock price will go that low without some major help from the Dow. Their long-term prospects look very good.
In the face of increased competition from the likes of Amazon and Wal-Mart the company continues to grow faster than the pet products and services segment of retail. SSS was 7% last quarter, and I expect similar numbers this quarter. Margins continue to improve as the company focuses on high-end premium products for pet owners. The company has a competitive advantage in its pet services segment over non-specialty stores like Wal-Mart and Costco, and especially online retailers like Amazon.
How can you not profit from a company that provides goodies for one of the most loved members of the family for which no expense will be spared. It's not just an animal anymore! The same as Buffet's HD, when he said you can't miss on a company where the customer tattooes it's name on their forhead.
People love their pets and Petsmart is successfully marketing high end products to animal lovers. They are dominating the pet services industry and have a cheap valuation for their earnings and growth.
This stock hs momentum,consistant upside earnings and will also yield a small dividend. Has been strong for some time but leave it to the market to look for a reason to punish like LULU.
In good times and even more in bad times, we love and spoil our pets. With fewer people having families, I think people feel the void with pets.
run its course.http://online.barrons.com/article/SB50001424053111903964304577422280562632676.html?mod=BOL_hpp_highlight_top
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