Last week saw the newest second-quarter earnings release from PetMed Express, Inc. (NASDAQ:PETS), an important milestone in the company's journey to build a stronger business. PetMed Express missed revenue estimates by 2.1%, with sales of US$75m, although statutory earnings per share (EPS) of US$0.42 beat expectations, coming in 5.0% ahead of analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, PetMed Express' dual analysts are forecasting 2021 revenues to be US$309.5m, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 5.9% to US$1.59. In the lead-up to this report, the analysts had been modelling revenues of US$313.3m and earnings per share (EPS) of US$1.52 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$33.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that PetMed Express' revenue growth is expected to slow, with forecast 1.2% increase next year well below the historical 5.4%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that PetMed Express is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around PetMed Express' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for PetMed Express going out as far as 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for PetMed Express you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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