Are PetSmart, Inc. (PETM) Shares Falling Ill?

Are PetSmart, Inc. (PETM) Shares Falling Ill?

By Carly Forster

PetSmart, Inc. (NASDAQ:PETM) is an Arizona based specialty retail chain with 1,289 operating stores in the United States, Canada, and Puerto Rico. The retailer sells specialty pet supplies and services such as grooming, dog training, dog and cat boarding facilities, and a daycare. The company recently announced that they are moving to ban dog and cat treats made in China due to pets falling ill.

PetSmart, Inc. (NASDAQ:PETM) plans to stop selling Chinese made pet treats beginning March 2015. PetSmart spokeswoman Erin Gray said, “This is something we’ve been working toward for some time, and feel it’s the right thing to do for pets and our customers.”

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The company last issued its quarterly earnings report on Wednesday, May 21st. PetSmart reported $1.04 earnings per share, beating analysts’ consensus estimate of $1.01 by $0.03. During the same quarter last year, the company posted $0.98 earnings per share. PetSmart had profits of $1.70 billion for the quarter, compared to analysts’ consensus estimate of $1.77 billion. The company’s quarterly proceeds were up 1.1% on a year-over-year basis. On average, analysts predict that PetSmart will post $4.36 earnings per share for the current fiscal year.

Shares of PetSmart, Inc. (NASDAQ:PETM) opened at $55.56 on Friday, May 23. The company has a 1-year high of $77.32 and a 1-year low of $55.02. The stock’s daily moving average is $55.32 and has a 50-day moving average of $66.44. The market cap for PetSmart is $5.46 billion and its P/E ratio is 13.56.

On May 22, Jeffries analyst Daniel Binder reiterated a HOLD rating for PetSmart, Inc. (NASDAQ:PETM), but lowered his price target from $68 to $55. He explained, “Q2 results and guidance were unsettling to say the least as fears of increased competition become reality. Traffic has been under pressure with a tough consumer environment blamed in recent quarters, but today management signaled that internet competition and bricks & mortar are getting tougher, especially as premium food products get more points of distribution. Meanwhile the consumables reset has not produced expected results.” Binder has a +7.0% average return and a 61% success rate according to TipRanks.

Goldman Sachs analyst Matthew Fassler also maintained a Neutral rating for the stock on May 22 and lowered his price target from $71 to $62. Fassler has a +5.4% average return and a 52% success rate.

On the other hand, on May 22, Seeking Alpha blogger The Value Investor spoke positively about PetSmart saying, “Combined with a rapid pace of share repurchases, a rock-solid balance sheet and an appealing valuation, the latest sell-off makes shares quite appealing.” The Value Investor has a +9.2% average return and a 62% success rate.

PetSmart, Inc. (NASDAQ:PETM) currently has an analyst consensus of HOLD 

Carly Forster writes about stock market news. She can be reached at [email protected]

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