Action Calls: Petmed Express Inc. (PETS) v2

Top Small Cap Growth/ momentum Play (Growth BUY rated: multi-factor Quant “Smart” Screen)

Buy: Petmed Express Inc. (PETS)

Recent price: $43.41

Model projected value:  $47*

 

Petmed Express Inc. (PETS) recent price $43.41: PetMed Express, Inc. (PetMed Express), doing business as 1800PetMeds, is a pet pharmacy. The Company markets prescription and non-prescription pet medications, and other health products for dogs and cats, direct to the consumer. It offers a selection of products for dogs and cats. Its product line contains approximately 3,000 stock keeping units (SKUS) of pet medications, health products and supplies. Its products include brands of medication, such as Frontline Plus, K9 Advantix II, Advantage II, Heartgard Plus, Sentinel, Revolution and Rimadyl. It also offers additional pet supplies for sale on its Website, which are drop shipped to its customers by third parties. These pet supplies include food, beds, crates, stairs, strollers and other pet supplies. Its products included Non-Prescription Medications (Over the Counter (OTC)) and supplies, and Prescription Medications (Rx). Its customers are located in California, Florida, Texas, New York, Virginia and Georgia, among others.

PETS has a recent history of beating earnings estimates, followed by favorable price momentum

 

PETS analysts raised eps estimates again. PETS has a very high analysts revision factor score.

ANALYST REVISIONS

This Quarter (FQ Sep-17)                 This Year (FY Mar-18)                       Next Year (FY Mar-19)

Measure Component Percentile                       Blended Mean Change      Predicted

Surprise                Blended Mean Change               Predicted

Surprise                Blended Mean Change               Predicted

Surprise

Revenue              59                         -0.4%     0.6%                             0.2%      0.3%                    0.5%               0.7%

EBITDA 88                         3.0%      1.6%                     2.3%      0.7%                    2.0%      1.8%

EPS       88                         1.8%      3.1%                     2.0%      1.4%                    3.0%      2.2%

Mean Recommendation Change

Recommendations            92                         -0.40

 

PETS has above avg core fundamental margins:

PETS
(Mar-2017)
Growth Industry
Merchandise Margins 31.80% (0.70%) YoY
Gross Margin 35.15% 3.26% 4Q 54.05%
Operating Margin 18.56% 3.06% 4Q 3.02%
Net Margin 11.90% 2.12% 4Q 2.21%
Asset Turnover 0.60 (3.28%) 4Q 0.44
ROE 8.21% 1.61% 4Q 1.12%
Debt/Equity 0.00% 4Q 45.46

 

PETS is undervalued relative to its peer group

 

  PETS       peers
LTM 24-Oct-17 NTM
PE 33.44 25.66 37.87
EV/EBITDA 19.12 15.81 18.04
Div Yield 2.18% 1.97% 0.00%
EV/Sales 3.22 2.94 3.64
P/CF 18.64 18.03 29.67
P/B 9.00 8.51 5.23

 

Meanwhile, Short interest has grown to a very high level of over 31% of the float.

*Model valuation assumptions : 1.50 ttm eps, 5yr cagr 15%, 25xpe, 10% discount rate.

 

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Singular Staff

 

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