PetMed Express Earnings: Here’s Why Investors are Buying Shares

PetMed Express Inc. (NASDAQ:PETS) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up over 3%.

Start 2013 better than ever by saving time and making money with your Limited Time Offer for our highly-acclaimed Stock Picker Newsletter. Click here for our fresh Feature Stock Pick now!

PetMed Express Inc. Earnings Cheat Sheet

Results: Net income increased 17.95% to $4.6 million (23 cents per diluted share) in the quarter versus a net gain of $3.9 million in the year-earlier quarter.

Revenue: Decreased 1.82% to $49.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: PetMed Express Inc. reported adjusted net income of 23 cents per share. By that measure, the company beat the mean analyst estimate of $0.18. It missed the average revenue estimate of $49.97 million.

Quoting Management: Menderes Akdag, President & CEO, commented: “We were able to increase our gross margins and decrease our operating expenses to improve our bottom line results this quarter. For the quarter ending December 31, 2012 our gross profit increased by 75 basis points, this increase can be attributed to a change in our product mix to higher margin items, including generics. For the quarter ending December 31, 2012 our operating expenses decreased by 170 basis points, mainly due to a reduction in advertising spending. The advertising costs of acquiring a new customer were reduced to $35 for the quarter ended December 31, 2012, compared to $36 for the same quarter the prior year. Cash from operation for the nine months ended December 31, 2012 increased 59% to $21.8 million, compared to $13.7 million for the same period the prior year. Although sales were slightly down during the quarter ended December 31, 2012, reorder sales increased by 1.2%. The unavailability of Novartis brands, due to the manufacturer’s suspended production, continued to negatively impact our sales. Looking to the future, we will continue to focus on advertising efficiency to improve new order sales and shift sales to higher margin items, including generics, while continuing to expand our product offerings.”

Key Stats:

Revenue decreased 14.7% from $58.15 million in the previous quarter. Net income increased 14.14% from $4.03 million in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.19 and has not changed. For the current year, the average estimate has moved up from a profit of $0.76 to a profit of $0.77 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials.)