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Charts and Metastock: |
Earnings were out on July 26th:
«PetMed profit jumps 75% as sales soar
(8:13 AM ET) NEW YORK (MarketWatch) -- PetMed Express Inc. (PETS: news, chart, profile) posted Monday fiscal first-quarter net income of $3.15 million, or 15 cents a share, up from $1.8 million, or 8 cents a share in the same quarter a year ago. The supplier of pet medication said sales for the period ended June 30 rose 24% to $43.6 million. The Thomson First Call average estimate was for earnings of 14 cents a share. The Pompano Beach, Fla. company said it acquired around 217,000 new customers in the quarter compared with 191,000 in the year-ago period. PetMed said the advertising cost of acquiring a new customer was around $35 in the first quarter, down from $41 in the same quarter a year ago. On Friday, the stock was unchanged at $8.80.»
15 cents a share on the fiscal first quarter, if we just extrapolate this for the entire year with no growth we get 60 cents in profit per share. The closing price for PETS yesterday was $10.38, so the P/E ratio is $10.38/$0.6 = 17.3
17.3 earnings multiple for a stock that has earnings growth in the range of 75% is not right. The stock is now lower than it was last year, and earnings have improved 75% and revenues rose 24%. I believe this is a business that when it grows more, it just grows more, it is a matter of notoriety.
Technically the stock is enjoying a strong uptrend and yesterday it penetrated the zone of the prior all time highs:
I believe PETS will make a new all time high on this move, above $13 a share, so I'm buying the stock today at the open, as always 6.66% of the 3 Stocks on Fire Portfolio.
Everyday after the close I will update the analysis on PETS until I sell the stock. At www.3stocksonfire.org I manage a public and diversified portfolio of stocks which is up 140% since April 2005.
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