Pets at Home (PETS) AI Stock Analysis

• Market Cap: £1.06B
• Dividend Yield: 5.58%
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 12.1
• Beta (1Y): 1.40
• Revenue Growth: 2.78%
• EPS Growth: 11.20%
• Country: UK
• Employees: 8,369
• Sector: Consumer Cyclical
• Sector Strength: 53
• Industry: Retail - Discretionary
• EPS (TTM): 0.19
• Shares Outstanding: 459,491,060
• 10 Day Avg. Volume: 1,888,219
• 30 Day Avg. Volume: 1,544,238
• PEG Ratio: 1.08
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.72
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 297.50p
• Price Target Upside: 26.70% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

Pets at Home scores well on financial performance with strong revenue growth and a solid balance sheet, though cash flow and net margins need attention. Its valuation is attractive with a low P/E ratio and high dividend yield. Technical analysis presents mixed signals, with short-term upward momentum but longer-term challenges.

Positive Factors

Investment and Growth Potential

The opportunity in the Vet business is becoming increasingly apparent and underpins much of the group valuation.

Veterinary Business Performance

The Vets business recorded a strong LFL of +20%, supporting the overall performance.

Negative Factors

Profit Decline

Retail PBT declined to £22.0m despite the c.£14m of one-offs in underlying profit in H1'24.

Retail Performance

Pets at Home reported a soft Q3 Retail LFL, slowing to -2.8%, with particularly weak footfall from October.

Pets at Home Business Overview & Revenue Model

Company Description

Pets at Home (PETS) is a leading pet care business in the United Kingdom, offering a comprehensive range of products and services for pets and their owners. The company operates through a variety of sectors including retail, veterinary, and grooming services. Pets at Home provides a wide assortment of pet food, accessories, and supplies, alongside professional grooming and veterinary services through its in-store and standalone locations.

How the Company Makes Money

Pets at Home generates revenue primarily through its retail operations, which include the sale of pet food, accessories, and supplies across its extensive network of stores and online platform. In addition to product sales, the company earns money from its veterinary services, provided through a network of in-store veterinary practices and standalone veterinary surgeries. These services are offered under various brand names, contributing significantly to the company's earnings. Furthermore, Pets at Home benefits from its grooming services, offering professional grooming and spa treatments for pets. The company also engages in strategic partnerships and collaborations that enhance its product and service offerings, thereby expanding its customer base and revenue potential.

Pets at Home Financial Statement Overview

Summary

Pets at Home demonstrates stable revenue growth and strong profit margins, although there are pressures on profitability with declining net profit and EBIT margins. The balance sheet remains solid with low leverage and strong equity, but cash flow generation could be improved.

Income Statement

Pets at Home shows a stable revenue growth with a revenue increase of 5.16% year-over-year from 2023 to 2024. The gross profit margin stands at 46.82%, indicating strong cost management. However, the net profit margin has decreased to 5.36% this year from 7.17% the previous year, suggesting pressure on the bottom line. EBIT and EBITDA margins are healthy at 8.26% and 15.45%, respectively, but have declined compared to last year, signaling some operational challenges.

Balance Sheet

The company maintains a solid equity base with an equity ratio of 58.69%, showcasing financial stability. The debt-to-equity ratio is 0.43, reflecting a conservative leverage strategy. Return on equity stands at 8.01%, though it has decreased from last year's 9.82%, indicating a need for improved profitability.

Cash Flow

Operating cash flow is robust at £210 million, though it has decreased from the previous year's £251.2 million. The free cash flow to net income ratio is healthy, indicating efficient cash generation relative to net earnings. However, the free cash flow growth rate is negative at -6.96%, reflecting challenges in maintaining cash generation levels.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
1.48B	1.40B	1.32B	1.14B	1.06B
	Gross Profit
691.30M	668.30M	648.00M	559.40M	511.30M
	EBIT
122.00M	136.80M	163.80M	134.80M	103.70M
	EBITDA
228.10M	241.80M	267.90M	230.40M	213.60M
	Net Income Common Stockholders
79.20M	100.70M	124.50M	90.40M	67.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
57.10M	178.00M	166.00M	101.40M	79.10M
	Total Assets
1.68B	1.85B	1.77B	1.72B	1.77B
	Total Debt
426.30M	541.90M	479.90M	508.40M	627.40M
	Net Debt
369.20M	363.90M	313.90M	407.00M	548.30M
	Total Liabilities
695.30M	824.30M	717.90M	730.30M	837.90M
	Stockholders Equity
988.50M	1.03B	1.05B	993.70M	931.00M
Cash Flow		Free Cash Flow
161.50M	173.60M	192.30M	159.80M	175.60M
	Operating Cash Flow
210.00M	251.20M	248.10M	195.10M	215.20M
	Investing Cash Flow
-48.30M	-75.00M	-37.10M	27.90M	-50.30M
	Financing Cash Flow
-282.60M	-164.20M	-146.40M	-200.70M	-146.30M

Pets at Home Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 234.80
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PETS, the sentiment is Neutral. The current price of 234.8 is above the 20-day moving average (MA) of 230.63, above the 50-day MA of 218.77, and below the 200-day MA of 267.73, indicating a neutral trend. The MACD of 3.61 indicates Positive momentum. The RSI at 54.52 is Neutral, neither overbought nor oversold. The STOCH value of 16.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:PETS.

Pets at Home Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARD	76 Outperform	£295.82M	7.17	13.65%	6.71%	7.75%	-21.78%
PETS	75 Outperform	£1.06B	12.09	9.37%	5.58%	2.78%	11.20%
SMWH	67 Neutral	£1.37B	20.83	20.52%	3.10%	6.97%	-14.59%
BME	67 Neutral	£2.70B	8.27	42.42%	5.54%	6.82%	-8.24%
BWY	64 Neutral	£2.71B	20.83	3.77%	2.36%	-30.13%	-63.13%
Sector *	60 Neutral	$13.01B	10.45	0.79%	3.53%	1.60%	-22.47%

Pets at Home Corporate Events

Pets at Home Announces Update in Shareholder Voting Rights

Pets at Home Group Plc has announced a voluntary disclosure due to an update in the chain of corporations controlled by its substantial shareholder, FMR LLC. This update reflects an increase in voting rights from 8.46% to 9.85%, indicating a stronger influence of FMR LLC on the company, which may impact the company’s governance and future strategic decisions.

Pets at Home Maintains Profit Guidance Amid Market Challenges

Pets at Home Group Plc reported a 2.3% increase in consumer revenue for Q3 FY25, with strong growth in their Vet Group business offsetting a softer performance in retail. Despite challenging market conditions, the company maintained its full-year profit guidance, focused on margin performance and cost management, and is transitioning its online order operations to a new distribution center. The company anticipates ending the year with a strong balance sheet after significant investments and shareholder returns.

Neuberger Berman Acquires Significant Stake in Pets at Home

Neuberger Berman Group LLC has acquired a 5.09% voting rights stake in Pets at Home Group Plc, as reported on November 29, 2024. This acquisition highlights Neuberger Berman’s interest in the pet care market, potentially impacting Pets at Home’s governance and strategic direction as one of its significant shareholders.

Capital Group Reduces Stake in Pets at Home

The Capital Group Companies, Inc. has notified a reduction in their voting rights in Pets at Home Group Plc, dropping from 5.02% to 4.818987%. This adjustment indicates a significant change in the ownership stake by a major shareholder, potentially impacting the company’s stakeholder dynamics and shareholder confidence.