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PetSmart (PETM) Surges After Jana Partners Reveals Major Stake

By  +Follow July 3, 2014 10:15AM
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PetSmart stock, PETM, Jana Partners, PetSmart sale

Shares of PetSmart, Inc. (PETM) surged 12.48% to $67.27 on July 3 after the activist hedge fund Jana Partners disclosed a 9.90% stake in the retailer. Due to the move, Jana Partners will become the company’s largest shareholder.

More than 16.17 million shares were traded on the day, comparing with the average volume of 2.34 million. PetSmart currently has a market cap of $6.67 billion.

The company’s stock has been up and down in the past six months. In late May, the stock’s price shed 10.59% from $64.58 to $57.98 per share. The stock has a 52-week high of $77.32, and a 52-week low of $55.00 per share.

Jana Partners Reveals Major Stake

Jana Partners revealed plans to hold discussions with PetSmart’s management and board about ways to increase the value of its stock. According to the filing, Jana Partner would like PetSmart take a series of actions, including exploring various options to improve operating performance, the company’s capital structure, and management and board composition.

Jana Partners also revealed that it intended to ask PetSmart to explore a sale of the company, the fact that most likely sparked much of the day’s gains.

PetSmart, a Phoenix, Ariz.-based company, is the largest specialty pet retailer of services and solutions for the lifetime needs of pets in the United States, Puerto Rico, and Canada. The company also offers pet food and pet products through an e-commerce site, PetSmart.com.

One Retail Stock with Reason for Optimism

PetSmart’s stock has several strengths, which has greater impacts than its weaknesses. The strengths include revenue growth, growth in earnings per share, and solid financial position. The company has a quarter-revenue growth rate of 1.10%, though is slightly lower than the industry average of 1.50%, which still appears to have trickled down to the company’s bottom line, and to improve the earnings per share as well.

The current debt-to-equity ratio of 0.48 is much lower than the industry average of 36.80, implying that PetSmart has successfully managed its debt levels. But its weak quick ratio of 0.70 demonstrates a lack of ability to pay short-term obligations.

Q1 2014 Saw Improving Income

PetSmart released its financial results for Q1 of fiscal 2014 on May 21. According to the report, the company’s net income has increased 1.30% to $104 million, from $102 million in Q1 of fiscal 2013. Comparable store sales, or sales in stores open at least one year, including online sales, fell 0.60%, with comparable transactions decreasing 2.20%. Services sales grew 4.50% to $200 million.

“We are pleased with the company’s ability to achieve earrings per share growth of 6.10% while continuing to drive earnings before tax margin expansion during the first quarter,” said CEO David Lenhardt. “However, we did not achieve our sales goals, which were impacted by a challenging and volatile consumer environment and a competitive market.”

Fierce Competition Could Eat Into Profits

Indeed, challenges from rivals and the market itself should be noted by investors. Despite the large market of pets’ products and services in the U.S., competitors surround PetSmart. Large supermarkets like Walmart (WMT) also offers pet supplies, and small grocery stores sell limited but much cheaper products. In addition, e-commerce’s expansion has blocked the development of physical stores. Amazon (AMZN) offers free delivery on thousands of pet supplies, offering more convenience at a competitive price.

In order to win over consumers, PetSmart has taken several actions, including building its own online shopping system and improving user experience. The company began to offer daily free shipping on orders over $49. It has also refined its online pet pharmacy services via well-designed selection items.

 

 

 

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Results for PETM
Peter Bardens
3 Jul 15 09:04:13
$PETM PetSmart, Inc. Announces Changes to Senior Leadership Team http://t.co/iw75Wf6A2G
Daily Contracts
3 Jul 15 08:01:04
Real-Time feed of company contracts, original agreements and executive updates from $PETM http://t.co/NVxjCbof1H
DailyStockPicks
2 Jul 15 08:31:30
$NVDA acquiring TransGaming Assets, values $TNSGF $TNG.V at 300%+ upside, 25 cents $AZN $JBLU $PETM investors read http://t.co/M6ATjY2Anp
John Turner
1 Jul 15 11:03:13
$PETM PetSmart, Inc. Announces Changes to Senior Leadership Team http://t.co/wrrOykyVqt
Peter Bardens
1 Jul 15 05:09:17
$PETM PetSmart, Inc. Announces Changes to Senior Leadership Team http://t.co/l9S7DRTsbC
stockerblog
30 Jun 15 08:50:32
http://t.co/XhhGcFVnUC & http://t.co/ep2yL79ouw domains are owned by PetSmart. Want more Stock Market Trivia? http://t.co/sWO55LSRx3 $PETM
ProTradersNews
30 Jun 15 01:14:39
$CAG $PETM: JANA Preys On Conagra; What To Expect From Today's Results: http://t.co/fddriVlhkm
Daily Contracts
29 Jun 15 10:20:26
Real-Time feed of company contracts, original agreements and executive updates from $PETM http://t.co/NVxjCbof1H
Metricle Alerts
29 Jun 15 05:40:22
RT @SeekingAlpha: TV Does A Premature Victory Lap http://t.co/Zrll2lQzMV $AMZN $BID $CBS $CMCSA $DIS $DISCA $ETSY $FB $FOX $GOOG $GOOGL $KS…
Jason Olive
29 Jun 15 05:20:47
RT @SeekingAlpha: TV Does A Premature Victory Lap http://t.co/Zrll2lQzMV $AMZN $BID $CBS $CMCSA $DIS $DISCA $ETSY $FB $FOX $GOOG $GOOGL $KS…
Austin Forex Insight
29 Jun 15 05:14:56
RT @SeekingAlpha: TV Does A Premature Victory Lap http://t.co/Zrll2lQzMV $AMZN $BID $CBS $CMCSA $DIS $DISCA $ETSY $FB $FOX $GOOG $GOOGL $KS…
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29 Jun 15 05:14:34
TV Does A Premature Victory Lap http://t.co/2UT3CIiJe6 $AMZN $BID $CBS $CMCSA $DIS $DISCA $ETSY $FB $FOX $GOOG $GOOGL $KSS $NEWS $PETM
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29 Jun 15 05:14:33
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28 Jun 15 23:40:35
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28 Jun 15 20:15:24
$SUTI Has Now Seen 400% Gains In The Past 2 Weeks! Special Update: http://t.co/l1zbyeF3OQ $PETM $FXI $USO
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28 Jun 15 20:15:03
$SUTI Up Another 66.67% Yesterday, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7uvGj $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 20:12:54
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
StockenheimerSchmidt
28 Jun 15 20:12:54
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Penny Stockington
28 Jun 15 19:28:50
$SUTI Up Another 66.67% Yesterday, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7cUOL $PETM $FXI $USO
StockenheimerSchmidt
28 Jun 15 19:26:39
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x726B1J $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 19:26:21
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
StockenheimerSchmidt
28 Jun 15 18:40:54
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x71OZD9 $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 18:40:34
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyV7IT $PETM $FXI $USO
Penny Stockington
28 Jun 15 18:35:01
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28 Jun 15 18:31:39
$SUTI Has Now Seen 400% Gains In The Past 2 Weeks! Special Update: http://t.co/l1zbyeF3OQ $PETM $FXI $USO
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28 Jun 15 17:54:35
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
Penny Stockington
28 Jun 15 17:48:30
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28 Jun 15 17:45:41
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28 Jun 15 17:08:39
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
Penny Stockington
28 Jun 15 17:02:14
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28 Jun 15 17:00:09
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28 Jun 15 16:48:23
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x726B1J $PETM $FXI $USO
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28 Jun 15 16:04:20
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28 Jun 15 16:02:34
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x726B1J $PETM $FXI $USO
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28 Jun 15 15:18:46
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
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28 Jun 15 15:17:12
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28 Jun 15 15:15:07
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28 Jun 15 15:08:25
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x71OZD9 $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 14:32:48
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
Penny Stockington
28 Jun 15 14:31:19
$SUTI Up Another 66.67% Yesterday, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7cUOL $PETM $FXI $USO
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28 Jun 15 14:29:29
$SUTI Has Now Seen 400% Gains In The Past 2 Weeks! Special Update: http://t.co/l1zbyeF3OQ $PETM $FXI $USO
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28 Jun 15 14:20:54
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x71OZD9 $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 13:46:57
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyDwRl $PETM $FXI $USO
Penny Stockington
28 Jun 15 13:44:51
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StockenheimerSchmidt
28 Jun 15 13:34:44
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x726B1J $PETM $FXI $USO
Stock Dawgzz
28 Jun 15 13:01:23
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/bjcyyyV7IT $PETM $FXI $USO
Penny Stockington
28 Jun 15 12:54:57
$SUTI Up Another 66.67% Yesterday, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7uvGj $PETM $FXI $USO
StockenheimerSchmidt
28 Jun 15 12:44:28
Our Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x71OZD9 $PETM $FXI $USO
Stockaholics
28 Jun 15 12:42:22
$SUTI Has Now Seen 400% Gains In The Past 2 Weeks! Special Update: http://t.co/l1zbyeF3OQ $PETM $FXI $USO
				
				
By  +Follow July 3, 2014 10:15AM
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