PETSMART INC. $70 - Nasdaq symbol PETM

PETSMART INC. $70 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 103.3 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.petm.com) operates 1,301 pet stores in the U.S. and Canada. It also has 196 in-store PetsHotels, which look after pets while their owners are away.

In the second quarter of its 2014 fiscal year, which ended August 4, 2013, PetSmart’s earnings jumped 18.9%, to $93.4 million from $78.5 million a year earlier. PetSmart bought back $24 million of its shares during the quarter. Due to fewer shares outstanding, earnings per share rose 25.4%, to $0.89 from $0.71.

Sales gained 5.3%, to $1.7 billion from $1.6 billion. Same-store sales rose 3.4%, while sales of pet services, such as grooming, rose 7.3%. Services supplied 12.0% of PetSmart’s total sales.

The company now expects to earn $3.88 to $3.98 a share in fiscal 2014, up from its earlier forecast of $3.82 to $3.94. The stock trades at a high but still reasonable 17.8 times the midpoint of the new range.

PetSmart is a buy.

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