PetMed Express Earnings: A Mixed Picture

PetMed Express Inc. (NASDAQ:PETS) reported net income above Wall Street’s expectations for the second quarter. PetMed Express is a nationwide pet pharmacy. The company markets prescription and non-prescription pet medications and other health products for dogs, cats, and horses direct to the consumer.

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PetMed Express Inc. Earnings Cheat Sheet

Results: Net income for PetMed Express Inc. rose to $4 million ($200 per share) vs. $3.9 million (19 cents per share) in the same quarter a year earlier. This marks a rise of 2.6% from the year-earlier quarter.

Revenue: Fell 0.1% to $58.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: PetMed Express Inc. beat the mean analyst estimate of 23 cents per share. It fell short of the average revenue estimate of $77.3 million.

Quoting Management: Menderes Akdag, CEO and President, commented: “We were able to stabilize our top line and improve our bottom line results this quarter. Net income growth in the quarter can be attributed to the leveraging of our operating expenses by saving 136 basis points. The advertising costs of acquiring a new customer were reduced to $42 for the quarter ended September 30, 2012, compared to $43 for the same quarter the prior year.”

Key Stats:

After four consecutive quarters of year-over-year profit drops, the company reported a profit increase last quarter. In the first quarter, net income fell 18.3% from the year earlier, while the figure fell 3.7% in the fourth quarter of the last fiscal year, 13.8% in the third quarter of the last fiscal year and 21% in the second quarter of the last fiscal year.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.9 percentage point to 33.3% from the year-earlier quarter. In that span, margins have contracted an average of 1.5 percentage points per quarter on a year-over-year basis.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the first quarter, by 3 cents in the fourth quarter of the last fiscal year, and by 5 cents in the third quarter of the last fiscal year.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 6.3% to $69 million from the year-earlier quarter.

Looking Forward: Expectations for the third quarter have not changed from 18 cents. For the fiscal year, the average estimate has moved up from 77 cents a share to 78 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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