PetMed Express (NASDAQ:PETS) shares plunged nearly 38% in the morning session today after the pet pharmacy delivered lower-than-anticipated second-quarter numbers and suspended dividends. Revenue increased by 8.6% year-over-year to $71 million, but the figure lagged consensus estimates by $5 million. Additionally, EPS of $0.00 missed the cut by $0.09. In comparison, the company had delivered an EPS of $0.13 in the year-ago period.
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While PetMed’s number of new customers rose by 25% over the prior year, it used up $215,000 in operating activities during the first six months of the year. In contrast, the company had generated $5.1 million from operating activities in the year-ago period.
As a result, PetMed is suspending its quarterly dividend. Now, the company plans to invest in the business to drive organic and inorganic growth. The company had been regularly doling out dividends for more than 10 consecutive quarters and consequently, the announcement is weighing heavily on the stock today.
Is PETS Stock a Good Buy?
Overall, the Street has a Hold consensus rating on PetMed. The average PETS price target of $15 implies a more than massive 162.7% potential upside. But that’s after a nearly 72% value erosion in PetMed shares over the past year.
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