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PetSmart Growing Strong

August 06, 2013 | About:
ABN

ABN

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With 45 million cat owners and 56 million dog owners in the U.S., pet food and needs is big business forecast to account for over $55 billion of spending in 2013 by American Pet Products Association.

PetSmart Inc. (PETM) is the largest specialty retailer for the needs of pets. The company employs approximately 52,000 associates and operates more than 1,289 pet stores in the U.S., Canada and Puerto Rico, over 196 in-store dog and cat boarding facilities, and is a leading online provider of pet supplies and pet care information.

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Revenues and earnings have grown strongly over the past four years as pet numbers have increased and as pet owners have increased spend. Key to this is a positive instore experience and better product range than general retailers and online suppliers. PetSmart achieves this by being constantly on the prowl for innovative new products and ensuring all its stores are stocked with more than 10,000 products, all available at everyday low prices. Including thousands of products exclusive to PetSmart.

Differentiating itself from general retailers, owners can go shopping with their pets to gauge their interest in products or avail of the many services that are available. Millions of dogs are groomed and bathed each year in PetSmart salons. PetSmart also operates over 195 in-store PetsHotels dog and cat boarding facilities and Doggie Day Camps. Expert veterinarian care is within arm's reach in more than 60 percent of stores, where Banfield Pet Hospital, operates full-service pet hospitals.

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*Consensus earnings forecasts from Yahoo Finance

Consensus earnings forecasts point to continuing EPS growth of 15.2% per annum for the next five years. For fiscal year 2013, the company anticipate comparable store sales growth of 3% to 4%, and raised EPS guidance from a previous range of $3.76 to $3.92, to current expectations of $3.82 to $3.94. The stock has increased 11% over the past 12 months and on 20 times historic earnings is not cheap. But investors who believe Americans will continue to want to buy treats for their pets may consider PetSmart to be the leading retailer capable of delivering the full product range.

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Risk Disclaimer: This article does not constitute a recommendation to buy or sell. Investing in stocks or other securities and derivatives is a high risk activity and not suitable for everyone. It is strongly recommended that individuals should consult with a SEC registered investment advisor prior to making any investment decisions.

Disclosure: The author holds no positions in the above mentioned stocks

Rating: 3.0/5 (2 votes)

Comments

jlozano
Jlozano - 11 months ago
Petsmart definitely has their bases cover with a sound strategic plan. The company's operational plan is on path of more financial gains.

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