Opinions
Stockchase Insights
Pet Valu Holdings
PET-T
HOLD
Aug 09, 2023
Stock price when the opinion was issued
You might be interested:
Canada's largest retailer in the space. Industry growth driven by pet adoption, and higher spending per pet. Really strong 22% EBITDA margins. Healthy free cashflow, reinvested in opening new stores and distribution centres. Consistently beats consensus.
Same-store sales growth has slowed since pandemic moves. Stock's corrected to 19x earnings, really good buy considering earnings quality and plans for growth. Yield is 1.4%.
The retailer of pet supplies in Canada opened 11 new stores last quarter, increasing its network to 794, and is targeting a total of 40-50 new stores in 2024. Cash reserves are growing while debt is retired. It trades at 22x earnings and its dividend is backed by a payout ratio under 40% of cash flow. We recommend setting a stop-loss at $21, looking to achieve $37 -- upside potential of 38%. Yield 1.5%
(Analysts’ price target is $37.59)We reiterate PET, Canada's largest pet food distributor with over 800 locations, as a TOP PICK. The company announced completion of its BC distribution centre, the second largest in Canada (following its own in Ontario) and plans to grow in Calgary. We like that cash reserves are growing, while debt is retired, while trading at 23x earnings. We recommend trailing up the stop (from $21) to $23, looking to achieve $33 -- upside potential of 28%. Yield 1.6%
(Analysts’ price target is $32.67)Shares are basically flat over the past year do some quarterly misses, but its PE has fallen to 22.34x, below its 24.06x, making it an attractive entry point. It pays a moderate 1.72x dividend because the company is investing in expansion, which should bolster top and bottom lines in future quarters and reinforce the company's prominence in this healthy space.
We reiterate this Canadian based Pet store operator. Recently reported earnings showed a 28% increase in net income. The company has opened its Vancouver regional distribution centre, positioning well ahead of the holiday season. We like that cash reserves are growing, while debt is retired. We recommend trailing up the stop (from $16) to $18, looking to achieve $32 -- upside of 25%. Yield 1.7%
(Analysts’ price target is $31.82)It got very overvalued during the pandemic hype, but this has since normalized. However, systems sales are still growing as they open 40-45 new stores annually. The market remains underserved outside cities. A cap-lite model, generating 22% EBITDA margins, and over 20% ROIC. Strong free cash flow. A great time to buy at 16x PE. Is recession-proof. Likely a takeover candidate.
Pet Value reported better-than-expected adjusted earnings per share but lower-than-expected same-store sales growth. Adjusted EPS of $0.36 declined 7% year-over-year missing estimates of $0.34. Same-store sales growth came in at 6%, driven by a 4.8% increase in transaction count. Revenue increased 13% year-over-year to $256.4 million, missing estimates slightly of $257.2 million. Adjusted EBITDA rose 4%, while the street called for a 1% decline. Gross margin improved by 1.5% year-over-year to 36.1% vs consensus of 34.6%. Management left the 2023 guidance unchanged at revenue of $1.05 to $1.08 million, same-store sales growth of 7% to 10%, and new store operations of 40-50 stores. The quarter overall was a miss and the guidance came in slightly lower than consensus.
Unlock Premium - Try 5i Free