More AnalysisVery surprised at the recent (and in my view unjustified) decline in the SP. The banking issue obviously caused a fair amount of panic. GLTA
PET operates as a specialty pet retailer that has been quite resilient amid challenging macro environment and is now trading at 22x times' Forward P/E. Growth has been quite impressive over the last few years around 15% on average. The balance sheet is quite leveraged, with net debt of $542M. Total debt is around 4.4x times trailing twelve-month cash flow of $123M, and cash flow declined around -11% compared to $138M last year due to investment in inventories. Based on management’s guidance, sales in 2023 expect to grow around 10% driven by strong same-store sales and new store openings.
We like PET and we think the company is trading at a reasonable valuation given the growth profile, although investors also need to keep in mind that the company’s leverage is quite high. We would be comfortable buying at this price. On a scale from one to ten, we would rate it as a seven. (5iResearch)