Shares of PetMed Express (PETS 50.72, -2.52, -4.7%), a company that sells prescription and non-prescription pet medications, as well as other pet products, directly to consumers, have been no dog of late. Since the end of October 2017, they have risen 51%!
With a move like that, it is clear that investors were expecting good operating news from the company and that's exactly what they got when PetMed Express reported its fiscal third quarter results before today's open.
The news was basically good on all fronts.
- Net sales increased 13.6% to $60.1 million and exceeded analysts' average estimate
- Average order size rose to $86.00 from $81.00 in the same period a year ago
- New order sales increased 15.5% and reorder sales increased 13.4%
- Gross margins expanded 500 basis points to 36.5% while operating margins improved 460 basis points to 19.1% of sales
- Net income per diluted share jumped 83% to $0.44 and handily exceeded analysts' average estimate.
PetMed Express didn't keep the good news restricted to its income statement either. In addition to the impressive earnings performance, the company also announced that its Board of Directors approved a 25% increase in the quarterly dividend from $0.20 to $0.25 per share.
The latter declaration, however, was facilitated by the strong operating performance and the boost to cash flow that resulted from it.
Shares of PETS traded up nicely in pre-market action, passing $57.00 per share, yet the pre-market gain has been rolled back entirely and then some amid more liquid trading conditions.
The retreat in the stock can't be attributed to a disappointing operating performance, which makes it likely, then, that it is a case of selling on the good news that was expected. At its current price, PETS is trading at approximately 30x trailing twelve-month earnings.