Rising pet ownership has sparked big gains for this stock

Rising pet ownership has led to big gains for this stock More Americans own pets than ever before, and the trend looks set to keep rising. That should continue to increase the earnings of leading companies in the business. Today we examine whether PetSmart can continue the success it has enjoyed in recent years. PETSMART INC. (Nasdaq symbol PETM; www.petm.com) operates 1,269 pet stores in the U.S. and Canada. It also has 195 in-store PetsHotels, which look after pets while their owners are away. In its 2013 fiscal year, which ended February 3, 2013, PetSmart’s earnings rose 34.2%, to $389.5 million from $290.2 million in fiscal 2012. The company spent $457 million on share buybacks during the year. Due to fewer shares outstanding, earnings per share rose 39.2%, to $3.55 from $2.55. [ofie_ad]

PetSmart has long history of raising dividends

Sales rose 10.6%, to $6.8 billion from $6.1 billion. That’s mainly because same-store sales rose 6.3%, while sales of pet services, such as grooming and Pets-Hotel stays, increased 9.7%. Services accounted for 11.0% of PetSmart’s revenue, unchanged from the prior year. Sales also benefited from 46 new stores and four new PetsHotels. The stock is now up 118% since we first recommended it at $32 in our October 2007 issue. The company also has a long history of raising its dividend. The current annual rate of $0.66 a share yields 1.0%. In the latest edition of Wall Street Stock Forecaster, we look at the earnings outlook for PetSmart and whether its share price is likely to keep rising. We conclude with our clear buy-hold-sell advice on the stock. (Note: If you are a current subscriber to Wall Street Stock Forecaster, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members Recent reports indicate that pet ownership is on the rise in countries with a growing middle class such as China. Does this give you confidence that investing in stocks in the pet business will be even more profitable in the future? Or do you think it will lead to a more competitive and fragmented market? Let us know what you think.

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