PetSmart Earnings Preview

Motley Fool Staff
Updated

PetSmart (NAS: PETM) will try to beat its earnings estimates for the third consecutive quarter. The company will unveil its latest earnings on Wednesday. PetSmart is a specialty provider of products and services for pets.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on PetSmart with 11 of 18 analysts rating it hold. Analysts don't like PetSmart as much as competitor Ulta Salon, Cosmetics & Fragrance overall. Six out of 10 analysts rate Ulta Salon, Cosmetics & Fragrance a buy compared to seven of 18 for PetSmart. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.

  • Revenue forecasts: On average, analysts predict $1.49 billion in revenue this quarter. That would represent a rise of 7.2% from the year-ago quarter.

  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.48 per share. Estimates range from $0.47 to $0.49.

What our community says:
CAPS All-Stars are solidly behind the stock with 95.6% granting it an outperform rating. The community at large agrees with the All-Stars with 93.5% assigning it a rating of outperform. Fools are keen on PetSmart and haven't been shy with their opinions lately, logging 248 posts in the past 30 days. Even with a robust four out of five stars, PetSmart's CAPS rating falls a little short of the community's upbeat outlook.

Management:
PetSmart's profit has risen year over year by an average of 23.5% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

29.4%

29.6%

30.6%

28.0%

Operating Margin

7.4%

8.2%

9.9%

6.0%

Net Margin

4.1%

4.8%

5.9%

3.3%

One final thing: If you want to keep tabs on PetSmart movements, and for more analysis on the company, make sure you add it to your watchlist.

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Earnings estimates provided by Zacks

At the time thisarticle was published

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