Bullboard - Stock Discussion Forum Pet Valu Holdings Ltd T.PET

Alternate Symbol(s): PTVLF

Pet Valu Holdings Ltd. is a Canadian specialty retailer of pet food and pet-related supplies. The Company has over 800 corporate-owned or franchised locations across the country. Through its neighborhood stores and digital platform, the Company offers more than 9,000 competitively priced products, including an assortment of premium, super premium and holistic brands. Its family of stores... see more

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TSX:PET - Post Discussion

Pet Valu Holdings Ltd > TD

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Post by retiredcf on Aug 08, 2023 11:47am

TD

Have a $45.00 target so all of the analysts would seem to agree that (as is often the case with these markets) today's SP decline is an overreaction. GLTA

Pet Valu Holdings Ltd.

(PET-T) C$30.32

Q2/23 First Look: Earnings Beat But with Moderating SSS Event

PET reported a beat in adjusted EPS of $0.36 vs. $0.39 LY, above TD/ consensus of $0.33/$0.34, though SSS were lighter than expected.
2023 guidance is unchanged. Revenue $1,050mm-$1,075mm, SSSG 7%-10%, new store openings 40-50, GM% slightly below 35%-36%, adjusted EBITDA $230mm-$237mm, and adjusted EPS $1.60-$1.66.

Impact: MIXED

EBITDA and EPS beat consensus estimates, but SSSG was soft. Though we expect that some investors won't like that SSSG moderated earlier than expected, 2023 is guidance unchanged, which implies that management is expecting an acceleration in SSSG in H2 (vs. the 6.0% in Q2) as it would take 6.5% SSSG in H2 to hit the bottom end of the guidance range (we are currently at 7.6% SSS for H2). We will update our model after the conference call, but we would expect our adjusted earnings forecasts to remain the same or rise a touch for 2023. The shares are down 23% YTD, arguably already discounting temporary earnings pressures and most concerns around Chewy's entry into Canada. PET now trades at only 17x NTM EPS, well below peers and the ~23x average since the IPO. Much of today's share price reaction will rest on what management has to say regarding the competitive environment, in our view. We still see PET as a good long-term growth story, and continue to recommend investors take advantage of the weakness before earnings growth returns to the expected mid-high teens by Q4/23.
SSSG was 6.0% (transactions +1.2%; average spend/transaction +4.8%), lapping a tough +21.2% comp LY. This was below our 9.8% estimate as both SS transactions and average spend per transaction were weaker than expected. Consumables (which account for 75% of sales) grew in the double-digits, which would imply that growth in the more discretionary/hardline items declined at least 6%. Consumers, unsurprisingly, appear to be cutting back on discretionary spend amidst high inflation.
Revenue increased 13% y/y to $256mm, falling just 1% shy of our $260mm estimate.
Adjusted EBITDA increased 4%, ahead of TD/consensus expectations for a decline 2%/1%. Versus TD, the beat was mostly from the 150bps higher-than- expected adjusted GM% (36.1% vs. 34.6% expected).