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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.

 

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for PETM
BreakingStocksNews
3 Mar 15 15:47:01
$ACT $.IXIC $.INX $ANF $TSL $HRB $PETM $VSLR: This is what to watch before Friday's jobs report: http://t.co/9hVsafPopt
The Fly
3 Mar 15 12:20:36
Notable companies reporting before tomorrow's open $PETM $TSL $LXRX $ANF $AEO $SSP: Full Story http://t.co/diOYzp5ZxO
CJ
3 Mar 15 12:20:25
Purchased $PETM calls ahead of earnings call scheduled for tomorrow morning before the market opens.
AvalonTradingTeam
3 Mar 15 11:46:49
USA, algunos resultados mañana en premarket $ANB #Abercrombie & Fitch $DSX Diana Ship. $PETM PetSmart $SALT Scorpio Bulkers $TSL Trina Solar
WhisperNumber.com
3 Mar 15 11:26:48
This weeks Whisper Reactors earnings alerts: $ANF, $PETM, $JOY, $SPLS, $HRB, $BIG http://t.co/JL8RE7JivV
Andrea Chapman
3 Mar 15 10:39:34
RT @scottrade: Earnings expected Wed: $HRB $PETM $VWR $AEO $PPO - 5 largest U.S. companies by market cap. Why these results matter: http://…
Scottrade
3 Mar 15 10:15:09
Earnings expected Wed: $HRB $PETM $VWR $AEO $PPO - 5 largest U.S. companies by market cap. Why these results matter: http://t.co/3qNkW2h5AT
Vic
3 Mar 15 09:09:59
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Open Outcrier
3 Mar 15 06:22:04
Earnings Premkt Wednesday: $AEO $ANF $AMED $ATHM $DSX $PETM $TOUR $TSL $W
StockEarnings.com
3 Mar 15 01:05:16
$PETM Since last ER, stock gained 12%. Will it continue aftr ER on 3/4 Before Open (Confirmed)? http://t.co/BcSOFMCHAW
DailyStockPicks
2 Mar 15 22:35:07
This $100M market cap #biotech stock has gotten 3 orphan drug designations in 3 weeks $AZN $JBLU $PETM investors read http://t.co/r6XCUw0ZTz
Richard Saintvilus
2 Mar 15 14:49:22
Throw Some Money at PetSmart and Wait for It to Fetch Higher Profits http://t.co/uaGZft94Ia via @TheStreet $PETM
Clair Voight
2 Mar 15 14:03:18
$PETM Jana Partners Sells PetSmart, Inc. (PETM) Stake http://t.co/UyVZjGQnmr
SmallCaps
2 Mar 15 12:22:44
The Best Investment You can Make Right Now: http://t.co/tXZ7ZtYkE1 $PETM $FXI $UWTI $SU $USO
ProVesting
2 Mar 15 10:32:02
$PETM: Can PetSmart (PETM) Keep the Earnings Streak Alive in Q4?: http://t.co/9P06aLf0gq
ThinkingProfit.com
2 Mar 15 07:49:03
$PETM: 6 open, suited signals indicate continued price increase beyond average holding times. http://t.co/BviNgpycpx
9-5Trades
2 Mar 15 07:31:17
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Darnell Lockett
2 Mar 15 07:01:38
RT @SPCAPIQearnings: Earnings season is winding down. Only 12 $SPX companies are set to report next week, including: $PGR, $BBY, $PETM, $HR…
TradersLog.com
2 Mar 15 04:21:20
Investors Await the Jobs Report and More Earnings http://t.co/bB9IiGJtWM $BID $BBY $AMBA $AZO $PETM $ANF $COST $SPLS $FL
HotKeyTrading
2 Mar 15 00:00:05
Hedge Funds Accumulating: $PGR $XL $WPX $PETM $LVLT $CALL $BAX $DRC $XLS $XEC $DVA $CTCT $TOL $ENDP $FMSA http://t.co/kl3VGOukhn #spy #mkt
Andres Trader ♚
1 Mar 15 22:49:16
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Rafa Garcia Negrete
1 Mar 15 22:48:18
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Michael
1 Mar 15 21:19:35
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Architrader
1 Mar 15 21:07:31
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Meowders Mutual Fund
1 Mar 15 20:23:23
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Krishna
1 Mar 15 20:12:30
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Maximino Villanueva
1 Mar 15 19:55:52
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
sherlok
1 Mar 15 19:09:21
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Deborah Soodhalter
1 Mar 15 19:03:43
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
sherryespresso
1 Mar 15 18:48:45
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
StockNewsWires
1 Mar 15 18:42:07
$PETM: Share Price of PetSmart, Inc Rally 0%: http://t.co/flefEqbuMl
BreakingStocksNews
1 Mar 15 18:42:04
$PETM: Share Price of PetSmart, Inc Rally 0%: http://t.co/G2Ig0CWgRh
Fer
1 Mar 15 18:36:17
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Hedge Bound
1 Mar 15 18:32:08
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
David Hegedus
1 Mar 15 18:30:47
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Diego R
1 Mar 15 18:19:34
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Wes Noon
1 Mar 15 18:19:21
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Alpha Maven
1 Mar 15 18:18:17
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
lounis Matouk
1 Mar 15 18:12:42
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Ale
1 Mar 15 18:11:58
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Jay
1 Mar 15 18:06:30
RT @WrigleyTom: Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http:…
Tom Wrigley
1 Mar 15 18:04:46
Some Earnings | March 2nd Week $SSYS $HALO $PANW $SLXP $BBY $JD $AMBA $PETM $W $CSIQ $FNSR $TFM $YY $VMEM $BIG $FL http://t.co/vo51mFFQHr
				
				
By  +Follow July 3, 2014 10:15AM
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