Why PetMed Express Shares Fell

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PetMed Express were looking under the weather today, falling as much as 11% after a disappointing second-quarter earnings report.

So what: The pet pharmacy came up short on the bottom line, delivering a per-share profit of $0.21 on expectations of $0.22. Revenue was up 4% to $60.5 million, edging past estimates of $60.3 million, but investors seemed to be focused on the bottom line. CEO Menderes Akdag noted that reorders increased 5.3% and that the average order size grew from $72 to $73, while profits were also helped by a decrease in advertising expense.

Now what: Considering PetMed's track record of beating earnings estimates in the last four quarters, shareholders seemed taken aback by the surprise miss. Still, the sell-off seems unwarranted for only missing earnings estimates by a penny. What seemed to put a dent into profits was the rising cost of medicine, as gross profit actually fell from a year ago. Management made no comment about that development in its release, but investors may want to see more than one quarter of results to determine whether that's a trend.  

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The article Why PetMed Express Shares Fell originally appeared on Fool.com.

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